Stocks see biggest post-earnings jumps since 2018

Key topics:.Stocks of companies beating earnings estimates surge, highest since 2018.Earnings wins boost market confidence amid inflation, interest rate uncertainty.Strong quarterly results offset concerns over tech stock valuations and trade risks..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..The seventh BizNews Conference, BNC#7, is to be held in Hermanus from March 11 to 13, 2025. The 2025 BizNews Conference is designed to provide an excellent opportunity for members of the BizNews community to interact directly with the keynote speakers, old (and new) friends from previous BNC events – and to interact with members of the BizNews team. Register for BNC#7 here..If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Alexandra Semenova and Jessica Menton___STEADY_PAYWALL___.With uncertainty swirling around the outlook for inflation and interest rates, there's been one dependable catalyst keeping Wall Street's spirits lifted: Corporate America's bottom line..US companies that beat analysts' profit estimates are seeing unusually large jumps in their stocks soon after — a sign that the latest slew of earnings reports are delivering a dose of confidence to traders even as expected policies from President Donald Trump and the direction of the Federal Reserve cast doubt on the staying power of the equity-market rally..The stocks of S&P 500 Index members that have reported stronger-than-expected profits in the most recent quarter have outperformed the benchmark by an average of 1.5% within a day of the results, according to data compiled by Bloomberg Intelligence. .Only those that account for about one-fifth of the S&P 500's market capitalization have so far reported. But if the trend holds, it would mark the best post-earnings reaction since 2018, data compiled by Bloomberg Intelligence show.."You can feel the market sigh in relief with each report that makes an upside case for the 2025 earnings environment," said Keith Buchanan, senior portfolio manager at GLOBALT Investments..Among those reaping the biggest rewards for strong readouts was Netflix Inc., which jumped almost 10% after posting the largest quarterly subscriber gain in its history. JPMorgan Chase & Co. and Goldman Sachs Group Inc. soared on strong figures, along with megabank peers, while Delta Air Lines Inc. shares climbed after the carrier's quarterly profit topped analysts' estimates and it provided a rosy outlook for 2025..The robust results are a much-needed driver for US stocks after the S&P 500 traded sideways through much of January as Wall Street dialed back expectations for interest-rate cuts this year and the possibility of a global trade war instigated by Trump clouded the outlook. That's compounding angst about already stretched valuations, particularly for the tech stocks that have rallied on high hopes for artificial intelligence..With results coming from some of those so-called Magnificent Seven stocks — Apple Inc., Meta Platforms Inc., Tesla Inc. and Microsoft Corp. — some of that worry has been building up as analysts curb earnings expectations for the quarters ahead. That mirrors the broader shift on Wall Street, where expected earnings momentum — a ratio of upward to downward per-share profit estimates for the S&P 500 over the next year — has been hovering in negative territory, according to BI data..While it isn't unusual to see analysts ratcheting down earnings forecasts at the start of earnings season, it could be an early sign of changing sentiment. The net-revision momentum for EPS growth over the next year declined for 15 consecutive weeks for the S&P 500, the longest stretch in since early 2023, according to BI..But the most recent quarter's results, at least, have overshadowed concerns about what's ahead. The slew of positive earnings — combined with less aggressive tariff talk during Trump's first week than had been feared — helped send the S&P 500 to its second straight weekly gain.."That's one thing you can have confidence in when it's harder to have confidence in where monetary policy is going to be, where inflation is going to be, and where the tariffs are going to be," said Michael O'Rourke, chief investment strategist at JonesTrading..The advance will be tested next week, which marks the busiest stretch of this earnings season, with companies that make up nearly 40% of the S&P 500's market capitalization scheduled to report results..That's likely to open more of a gap between the winners and losers. The average S&P 500 stock has been moving roughly 5.5% in either direction, above the implied move of about 3.9% priced by options markets, according to data from Citigroup Inc. Going into the reporting season, strategists at Bank of America Corp. predicted US companies could see their biggest swings on record.."Notably, earnings-day volatility has not been simply a factor of higher macro volatility," Vishal Vivek, a strategist on Citigroup's trading desk, wrote in a note to clients. Instead, it's a function of investors growing more discerning in "an increasingly attractive stock-picking environment.".Read also:.Trump returns to the global stage, announces the "golden age of America" has begunParks Tau's R100bn fund: Unconstitutional and destructive – Ivo Vegter🔒 The Economist: Donald Trump has rewritten the history of January 6th.© 2025 Bloomberg L.P.

Stocks see biggest post-earnings jumps since 2018

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