Companies are hopping over a lowered bar this earnings season — but are still getting rewarded mightily for it — because investors had expected results to be much worse.
Companies that reported earnings so far this season have seen their stocks rise 1.12 percent on average. If that performance holds for the rest of the season, it will be the best earnings season in terms of stock performance in nine years, according to Bespoke Investment Group.
Source: Bespoke Investment Group
"Part of the reason that the market reacted so positively to the earnings is because expectations had fallen into this earnings season," Tom Essaye, founder of Sevens Report Research, said in an interview. "From a sentiment perspective, it was definitely better than what people were afraid of. People were afraid the earnings season was going to show businesses are falling off a cliff."