I said last week that nothing is following the historic consensus. October, traditionally a down month for the S&P 500, was up 2 percent. Not only that, but we closed at an historic high for the S&P and the Dow industrials.
The "Sell in May and go away" mantra didn't work either. The S&P is up 7.1 percent in the past six months.
So, in many cases, the least likely outcome is the one that has happened.
Now, of course, everyone is expecting a big up month in November, since it is traditionally a strong month and buybacks tend to come back after tapering off in October for earnings.
The least likely outcome is that November will be a down month. Get it? All the consensus is on one side.
On the earnings front, about 75 percent of the S&P has reported, and we are looking at third quarter year-over-year earnings growth that is once again likely to hit 10 percent. S&P Capital IQ currently has 8.2 percent growth. What's disappointing is that revenue growth has not improved much. It remains at 3.2 percent, not far from where it was at the beginning of the quarter.
What happened to weak global growth? What happened to the strong dollar hurting exporters?
As near as I can tell, the concerns about weak global growth have not gone away—they have been put off until 2015. Fourth quarter earnings estimates have come down. That is not surprising, but some companies have really taken down numbers. Netflix, for example, gave fourth quarter EPS guidance of 44 cents on Oct. 16, when consensus was closer to $1. That's not helpful!
However, analysts have already been lowering estimates for first quarter and second quarter earnings in 2015, and that is unusual. Two weeks ago, EPS growth for the first quarter was expected to be 11.1 percent. It now stands at 9.3 percent. For the second quarter, it was 9.5 percent, but it is now down to 8.1 percent.
Elsewhere:
Sysco reported earnings and revenues in line and case growth of 2 percent, roughly in line with expectations. CEO Bill DeLaney said the firm "managed acute inflationary pressures very effectively."
Sysco said its acquisition of U.S. Foods will not close before the first quarter of next year. This deal was announced nearly a year ago. When that deal closes, Sysco will control about 25 percent of the North American Food distribution business. The company still needs regulatory approvals from the Federal Trade Commission.