The S&P 500 is 5% off an all-time high, stellar earnings this week could send it there
Why are stocks racing?
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It’s earnings week for almost 40% of companies in the S&P 500—megacap names like Google and Microsoft chief among them, alongside a huge swathe of staples and cyclicals like Coca-Cola and Ford. A make-or-break week that either confirms strength and extends the rally or falters and marks the beginning of the end—so far, it’s going rather well.
Verizon topped subscriber and profit estimates, GM beat expectations and boosted its revenue, and Unilever rose on resilient demand despite cooling inflation. Over 80% of yesterday’s earnings reports are surprising to the upside. Here is the full calendar of all the companies reporting this week:
Massive earnings weeks such as this give us a window into the health of US corporations, and whether they are growing, stagnating, or struggling in aggregate. With 40% of US companies reporting, and analyst expectations for growth already surprising to the upside, it’s lining up to be a major week for equities.
The S&P 500 is within spitting distance of setting a new all-time high—just 5%, or roughly 280 points away from the 4,800 level it topped out at in 2022. Frankly, the attack of all-time highs after the breakout above the 4,200 area (remember: stocks in a box) seemed inevitable after such a long consolidation.
While still in extreme greed territory, that’s not to say the rally is necessarily losing steam—looking at the period from 2020-2022, the S&P 500 sustained this gap above its 125-day moving average for nearly two years. If earnings this week perform well as expected and support valuations, raising risk sentiment and drawing more investors into the fray as well, stocks could have the support that they need to climb to 4,800 or higher: