The S&P 500's projected 29.0% third-quarter earnings growth faces a test as more companies report this week, with results in from only 9% of index members by Oct. 16.
The index closed at 7,712.57 on Oct. 20. JP Morgan technical strategist Jason Hunter and Macro Risk Advisors' head of technical strategy John Kolovos cited roughly 7,500 as a level that could signal a deeper decline if breached, CNBC reported. The index's Sept. 16 intraday low was 7,507.77, and it closed that day at 7,551.81.
Of the companies that had reported by Oct. 16, 84% beat earnings-per-share estimates. Collectively, their earnings came in 2.6% above estimates; FactSet's five-year average surprise of 7.5% reflects completed quarters. The 29.0% growth figure blends reported results with estimates for companies that have yet to release earnings.
FactSet said 79 S&P 500 companies were scheduled to report during the week of Oct. 19. FactSet said cuts to health care earnings estimates had lowered its blended growth projection, partly offset by higher estimates for energy. As more companies report, their results will replace forecasts in the quarterly measure.
Corporate earnings and share prices moved in different directions in 2018. FactSet recorded 20.3% S&P 500 earnings growth for that year, while the S&P 500 price index fell 6.24%, calculated from S&P Dow Jones Indices' year-end closes of 2,673.61 and 2,506.85. The figures show why earnings growth alone does not establish the index's return.
The Federal Reserve is another scheduled event. It raised its federal funds target range by 0.25 percentage point to 3.75%-4% on Sept. 16 and said inflation remained elevated. The Fed is scheduled to meet Oct. 27-28 and lists a 2 p.m. ET release time on Oct. 28.
