Last Pandemic Profit Pop – Ohio News Time
Oil companies, airlines, hotels. Banks, miners, auto parts manufacturers. From the depression caused by COVID-19 a year ago, the business has returned in a significant and extensive way.
The second quarter earnings season started in earnest last week, with hundreds of S&P 500 companies reporting their latest 90-day financials. Expect this to be the highest level of profit growth.
According to FactSet, profits are expected to increase 64% from a year ago. This will be the highest annual growth rate since the end of the Great Recession over a decade ago. It will also be a strong rally in earnings expectations from just a few weeks ago. Analysts typically lower their financial forecast at the end of the quarter, but this time they don’t. At the end of June, earnings estimates rose on the back of corporate revenues, increased vaccinations and improving labor markets.
The surge in profits in the second quarter was much easier than a year ago when the virus was rampant, with all kinds of restrictions in place to slow the spread of bacteria.
Investors expected this to pop as the S&P 500 trades near record highs. Big tech stocks like Apple, Amazon, Google, Microsoft and Facebook have a huge impact on the index because of their size. However, less sexy areas of the market, such as energy, infrastructure and consumer discretion, have taken a big hit this year in anticipation of this profit situation.
As always when it comes to profit seasons, the market’s attention quickly shifts from current results to the future. A brief comparison from a year ago is fading, but there is no expectation of continued earnings growth.
Financial reporter Tom Hudson hosts “Sunshine Economy” at WLRN-FM in Miami and is vice president of News. He is a former co-presenter and editor of the Nightly Business Report on public television. Follow him on Twitter @ HudsonsView.
Pop of the last pandemic
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