Is the earnings recession finally over?
Today, Thomson Reuters reported that earnings for the S&P 500 Index are expected to grow 0.5 percent in the third quarter, which would end four consecutive quarters of negative growth. Revenues are also expected to grow 2.5 percent, which will end six consecutive quarters of negative revenue growth.
With only 14 percent of the S&P 500 reporting so far, this is shaping up to be a well above-average earnings season. Both the number of companies beating (80 percent) and the magnitude by which they are beating (7.3 percent) are both well above average, according to Thomson Reuters.
You can partly thank bank stocks. All the big banks — JPMorgan, Citigroup, Morgan Stanley, PNC, Wells Fargo, Bank of America, Comerica and Regions Financial — have beaten their top- and bottom-line estimates, in some cases by a substantial margin.
That's important, because financials are the second largest sector in the S&P 500, after technology. Financial earnings are now expected to be up 6.7 percent, well above the 1 percent gain expected on October 1st.
The question is, what about the rest of the market?