Investors Are Betting on Earnings Even as They Fall
The first quarter’s struggles are being regarded as a short-term event.
Interpreting when a profit recession turns into an economic one is hard.
Photographer: Mary Turner/Getty Images
Investors and strategists appear to be willing to say “Earnings shmernings.” Later this year, the market could show that thinking to have been nonsense.
Analysts have been warning for months that the first quarter could be bleak, at least from an earnings perspective, with profits on average dropping 4 percent for the companies in the S&P 500. But share prices have continued to rise, even as some of those poor results have been coming in. Earnings from Goldman Sachs Group Inc. on Monday sapped the optimism that banks would somehow buck the recent economic slowdown after JPMorgan Chase & Co. offered some encouragement on Friday, when it reported strong results driven by higher consumer spending. Still, shares of the S&P 500 are up nearly 3 percent since the end of the first quarter.