Lessons from earnings season: 2Q was the bottom and the rest of year is looking strong

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At the halfway point for second quarter earnings, the feared recession and earnings apocalypse has faded away as the soft landing is now consensus.

But there are several issues facing investors in the second half. The second quarter is the bottom for earnings The second quarter is expected to see earnings decline 6.8% from a year ago, according to Refinitiv. This is expected to be the "trough" for this earnings cycle. Estimate for the rest of 2023 and into 2024 are all notably higher. S & P 500 Q1: $53.08 Q2: $52.25 Q3: $55.46 Q4: $57.37 Q1 24: $57.36 Q2 24: $59.

That's why investors pay more attention to guidance than to reported results . Investors are always asking: is the earnings trend up, down, or sideways? For the S & P 500, the overall earnings trend this year has been that estimates started higher in the beginning of the year, but have been coming down . The good news is that after coming down in the first half of the year, estimates have stopped dropping.

 

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