Home » Weak Earnings Reports Aren’t Fazing Investors After Brutal Year for Stocks

Weak Earnings Reports Aren’t Fazing Investors After Brutal Year for Stocks

Disappointing earnings reports from several big companies don’t seem
to be fazing investors, with the S&P 500 up nearly 5% this month, and
2.5% last week, after a punishing start to the year.

Even some companies that have posted sharply lower quarterly results
have seen their shares rally in the following days. Bank of America
Corp BAC -0.44%▼. posted a slimmer-than-expected profit last week, yet
its shares finished the session little changed and jumped 3.4% the
subsequent day. Netflix Inc. NFLX -0.87%▼ said it lost nearly a
million subscribers, and its stock jumped 7.3% in the next session.
Tesla Inc. TSLA -1.92%▼ snapped its streak of record quarterly
profits, yet its shares rallied 9.8% the following day. All three
stocks have underperformed the broader market this year.

So far this reporting season shares of companies in the s&p 500 that
had missed Wall Street’s earnings expectations have slipped 0.1% on
average from the two days before the report to the two days after
according to FactSet That compares with the five-year average of a
2.4% decline. With inflation at a four-decade high, the Federal
Reserve is in the midst of an aggressive campaign to raise interest
rates to rein in rising prices.

Many investors say they had braced for a messy quarter. Companies
across industries have pointed to higher input costs and waning
consumer demand. It just hasn’t been the train wreck that I think
investors were predicting, said Sandy Billary Portfolio Manager at
Valerie, and company sentiment was pretty negative going into
earnings.

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