Spectacular earnings refocus investors on the reopening trade
The S&P 500's economically sensitive cyclical sectors like consumer staples, energy and materials outperformed Big Tech stocks meaningfully on Monday, as stellar earnings reports have again focused traders' attention on the reopening trade.
Where it stands: The Dow rose 0.7%, with the S&P up 0.3% while the Nasdaq fell 0.5%. Major names like Amazon, Alphabet, Facebook and Microsoft all ended lower, despite each of those companies reporting strong earnings for Q1.
- Chipmakers also fell, with the Philadelphia SE Semiconductor index down by 1.2%.
- "We’ve seen a slight change in the pace of value stocks outperforming growth stocks year-to-date," Rod von Lipsey, managing director at UBS Private Wealth Management, told Reuters.
The intrigue: Just over 60% of S&P 500 companies have now reported first quarter results, and it's looking like a spectacular earnings season.
- Earnings are on pace to grow 45.8% for Q1, up from an expected 24.5% at the start of earnings season and a 15.8% forecast at the start of the quarter, according to FactSet's Earnings Insight report.
- Further, a record 86% of companies so far have surpassed consensus EPS expectations, well above the 77% one-year average.
- Companies are beating earnings expectations by nearly 23%, better than the 14.5% one-year average positive surprise rate and the second-highest rate on record.