It's a well-worn piece of Wall Street mythology by now: We are in a profits recession.
The S&P 500 has seen four consecutive declines in quarterly earnings. First quarter 2016 earnings are expected to be down roughly 8 percent, following a 3.8 percent decline in the fourth quarter of 2015.
There's a reasonable shot that might be about to change, however, and that may be a motivating factor in the markets march toward historic highs.
That's right — historic highs, because we are very close. The Dow passed 18,000 yesterday, a mere 300 points from the closing high of 18,312 on May 19 of last year. The S&P 500 is less than 40 points from its historic high of 2,131, as well.
Earnings, and more importantly second-quarter guidance, are the key to pushing the markets to new highs. Financials rallied last week as the biggest banks reported modest gains in loan growth, despite flat net interest margins. A little better than expected was enough to move this unloved group up.