Feb 7, 2020 - Economy & Business

S&P 500 earnings continue to improve

With more than half of the companies on the S&P 500 having reported earnings, the consensus estimate for fourth-quarter earnings is down just 0.1% from three weeks ago. That's well above the 1.3% average decline for the past five years, excluding 2018, which was boosted significantly by the Tax Cuts and Jobs Act.

By the numbers: So far, 22% of S&P companies have revised first-quarter profit targets higher, the highest percentage since Q2 2018 and third-highest since 2012, Bloomberg data show.

  • And, Bloomberg notes, "sell-side EPS estimate revisions are tracking at 47%, an improvement from readings in the 30%-range this time last year."

Yes, but: The coronavirus outbreak may lower 2020 earnings, Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, told Bloomberg. She expects downside effects from the virus could pull growth figures down by about 4%.

Go deeper: The 5 biggest U.S. stocks account for almost 18% of the S&P 500's market value

Go deeper

Earnings on pace for a strong rebound

Data: FactSet; Chart: Axios Visuals

Thanks to a cadre of better-than-expected earnings results from the companies that have reported their fourth-quarter earnings so far, the earnings growth rate for the S&P 500 has risen to 0.7%.

Why it matters: That is a far cry from the estimated earnings decline of -1.7% at the end of the quarter. If it holds, this would mark the first time the index has reported year-over-year growth in earnings since Q4 2018. 

The 5 biggest U.S. stocks account for almost 18% of the S&P 500's market value

Illustration: Lazaro Gamio/Axios

The five biggest U.S. stocks — Apple, Microsoft, Alphabet, Amazon and Facebook — have grown so explosively that they account for nearly 18% of the S&P 500 index by market value, AP reports.

Why it matters: Never before have five companies held such powerful sway over the index, according to Morgan Stanley strategists.

Coronavirus outbreak slams companies' 2020 sales projections

A man and a child walk past a closed Apple store in Shanghai on Feb. 20. Photo: Yifan Ding/Getty Images

The coronavirus outbreak already is eating into companies' 2020 plans, with a number of firms announcing significant expected hits to their sales.

What's happening: After warning that it would need to write down its revenue expectations, a new report from Nikkei says Apple's iPhone inventories could remain low until April or longer and that suppliers are "currently operating at around 30% to 50% of capacity."