Investors buy up earnings wins, sending stocks higher than usual

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Companies posted stronger\u002Dthan\u002Dexpected results pushing their share prices higher as earnings season gets off to a positive start. Read on.

The biggest bullish reactions to earnings beats have come from auto dealer Carmax Inc., whose shares logged a same-day pop of 9.6 per cent when it reported on April 11, and casino operator Las Vegas Sands Corp., which jumped 3.7 per cent when it released results on April 19. The benchmark S&P 500 was unchanged on those two trading sessions.

RBC Capital Markets strategists led by Lori Calvasina also pointed out on April 24 that names in the Russell 1000 have seen a similar trend this quarter, with those beating earnings estimates outperforming the broader market slightly more than in previous seasons, while misses are getting hit less hard.

According to RBC, the performance of Russell 1000 and 2000 companies with U.S.-only exposure is also starting to improve, catching up to companies with high international exposure, which have outperformed in recent months.Article content April 24 marked the start of the busiest week for earnings season, with roughly 40 per cent of the S&P 500 on deck to deliver results. Of the 88 S&P 500 companies, comprising roughly 25 per cent of the gauge, that have released figures, 63 per cent beat on earnings-per-share and 75 per cent topped sales estimates, more than the historical average beat on both metrics, according to BofA data.

While BofA noted that “earnings season is a good time to be a stock picker,” it warned about the technology sector ahead of closely watched first-quarter results from mega-cap giants. Microsoft Corp. and Alphabet Inc. are scheduled to report after markets close on April 25, while Meta Platforms Inc. is on tap for April 26.

 

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