Random Thoughts

This week, Wall Street’s attention is almost exclusively on Q2 earnings reports, which are now projected to decline 1.3%, year on year, according to Wall Street consensus estimates for the S&P 500 index.

EPS should be followed up with an additional 0.8% slip in Q3. Compared with estimates on 3/31/19, S&P 1500 sectors with the largest upward revisions to Q2 EPS growth include financials, health care and real estate.

Sub-industries with the most favorable adjustments include diversified metals & mining, diversified REITs, heavy electrical equipment, industrial REITs and specialized consumer services.

Those with the deepest reductions to Q2 estimates include the consumer discretionary, industrials and materials sectors, along with the aluminum, forest products, interactive home entertainment, leisure products and textiles sub-industries. Q2 results will likely end up in the black, however, as was the case in each of the preceding 29 quarters, which saw actual growth exceed end-of-quarter estimates by an average of 3.8 percentage points.