Corporate America is adding weight to the Federal Reserve’s upbeat view of the US economy with about three-quarters of the S&P 500 Index companies that have reported so far beating earnings forecasts.

With only about 50 companies still to report, average March-quarter revenue growth is 5.2 percent, above the 4.8 percent forecast ahead of the reporting season.

Last week, Fed chair Jerome Powell said economic activity is solid and that the lack of inflation pressures is probably due to “transitory factors.”

Coming off last year’s sugar high fueled by the US corporate tax cuts, it isn’t surprising that first-quarter earnings were below the March quarter last year. However, the average decline was just 0.8 percent compared with the forecast 3.9 percent slide.

“They’re not down as much as the market thought at the start of the earnings season, but they’re still down. That’s the first decline we’ve seen since 2016,” says Mark Lister, the head of wealth research at Craigs Investment Partners.

“It’s well below the 25 percent-plus levels we were looking at in the middle of last year. If we hadn’t had the tax cuts, we would still have been looking at double-digit earnings last year – it might have been 10-12 percent instead of 25,” Lister says.

Some of the results from household names such as Amazon, Apple and Adidas have been “outstanding” with technology stocks continuing to perform well. All the weakness has been in cyclical and industrial stocks.

Among the technology stocks, 89 percent beat expectations while among utilities, only 48 percent exceeded forecasts.

Analysts are expecting S&P 500 companies will grow revenue 4.7 percent this calendar year and increase earnings 3.4 percent.

“There’s more good news than bad news, but there are still a few things to keep central banks a bit nervous,” Lister says.

For one thing, the current US expansion, the recovery from the GFC, is approaching the longest in history – it will be if growth continues through July.

Non-farm payrolls data on Friday spectacularly beat expectations with 263,000 new jobs added, a record 103 straight months of jobs growth, compared with expectations of 190,000. The US unemployment rate also fell to 3.6 percent, the lowest since 1969.

“That makes you think we’re on borrowed time, but if you think about the kind of expansion it’s been, it has been a very stop-start one,” Lister says.

“I think it’s a very different type of expansion than we’ve seen in the past” and a major reason for that has been the influence of central banks.

The Fed, for example, spent years since 2009 effectively printing money, known as quantitative easing, before slamming on the brakes and then starting to reverse that. But early this year, it put that reversal, and any further rate increases, on hold as doubts about the health of the global economy took hold.

“Central banks have been much, much more involved with an increasingly diverse range of tools,” Lister says.

“They’ve effectively lengthened this expansion and dragged out the cycle. It’s been longer and slower and flatter” than in previous cycles. “It does suggest that it could last for a while longer.”

A key thing to watch in the short term will be the US-China trade talks – Chinese Vice Premier Liu He is set to travel to Washington on Wednesday for a closing round of talks.

“The prospect of a successful resolution has helped fuel the rally this year so any negative news could lead to a sell-off,” Lister says.

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