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Data: FactSet; Chart: Axios Visuals

The behavior of U.S. stocks so far this earnings season has been unusual for both companies that beat expectations and those that missed, top equities strategists say.

What's happening: Analysts at Deutsche Bank note that "the S&P 500 is seeing a rare earnings season decline so far of (-4.2%)," compared to an average gain of 2.9% and in especially sharp contrast to the record rally of 11% in Q2.

  • And companies are seeing little stock bounce from beating their earnings estimates, "mostly flat relative to the market, instead of typical outperformance (+0.5pp historically)."

On the other hand: Companies that miss earnings expectations are being punished more severely than usual — twice as much, according to calculations from Wells Fargo, which found companies that missed consensus earnings estimates saw an average one-day decline of 4.4%.

  • That's on pace to be “the harshest quarterly punishing for missing consensus we have ever seen,” per Wells analysts, citing data that goes back to the first quarter of 2015.
  • “We suspect these post-earnings beat-downs largely are a result of equities getting ahead of themselves in prior weeks.”

The big picture: So far, a record 87% of reported companies have beaten EPS estimates, well above the historical average of 73% and prior record 84% in Q2.

  • The companies that have reported have beaten estimates by 16.3% in aggregate, just below the record 20.3% in Q2, per DB.

Yes, but: The S&P is on pace for an earnings decline of 14.6% year over year, after a 33% decline in Q2.

  • The S&P 500 is 12.5% above where it was at this point in 2019.

Go deeper

Jan 27, 2021 - Technology

Facebook stock whipsaws amid ad targeting concerns

Photo Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images

Facebook's stock showed volatility in after-hours trading Wednesday, despite adding users and beating on top and bottom lines.

Why it matters: Investors seem spooked by proposed changes to user data collection by Apple that would impact Facebook's ad business, in addition to perennial threats of new federal privacy regulations.

Ina Fried, author of Login
Updated Jan 27, 2021 - Technology

Apple's quarterly sales top $100 billion for first time

Credit: Apple

Spurred by strong sales of the latest iPhones, Apple reported it took in a record $111 billion in revenue for the three months ended Dec. 31, as the company crushed expectations.

Why it matters: The move showed even a pandemic didn't dull demand for Apple's latest smartphones.

Massachusetts Gov. Charlie Baker will not seek re-election in 2022

Mass. Gov. Charlie Baker (R) speaking during a press conference in November 2021. Photo: Jonathan Wiggs/The Boston Globe via Getty Images

Massachusetts Gov. Charlie Baker (R), a moderate who typically ranks as one of the nation's most popular governors, said Wednesday that he and Lt. Gov. Karyn Polito (R) will not seek third terms in 2022.

Why it matters: The decision leaves the gubernatorial race wide open and will likely affect multiple down-ballot races next year. Baker was expected to be the front-runner had he joined the race.