LPL Financial Market Signals Podcast

2019 First Quarter Earnings Preview l LPL Market Signals Podcast

April 08, 2019

LPL Research

Listen to the Market Signals podcast as our strategists preview the first quarter earnings season and what it indicates for the financial market and overall market outlook.

Given the fundamentals of the economy and some of these positive catalysts including the U.S.-China trade deal, we think earnings will accelerate from here on out. We expect another year of record profits.

- Jeff Buchbinder, LPL Equity Strategist

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In this week’s Market Signals podcast, the LPL strategists preview the first-quarter earnings season.

There are signs that leading economic data is turning higher. Stronger earnings and better leading economic data could lead to a stronger economy the second half of 2019.

According to FactSet, S&P 500 earnings in the first quarter are expected to be down 4%. This could end the streak of seven consecutive quarters of positive growth. However, earnings tend to come in stronger than expected when all is said and done. For over 39 consecutive quarters, they’ve topped estimates by an average of 3-5%. LPL’s strategists see little reason for the streak to end and are looking for potentially positive earnings growth for the first quarter.

There’s no doubt that the US economy has weakened the past few months, along with that of the rest of the world. But there is positive news. Leading data has greatly improved recently, including for copper, money supply, manufacturing, and employment. These leading economic indicators could suggest improvement down the stretch in 2019.

Stocks historically have done quite well during April. In fact, over the past 20 years no month has a better average return than the 1.7% return from the S&P 500 Index in April. Incredibly, this month has closed green 13 of the previous 14 years for the S&P 500 and 14 of 14 times for the Dow.

Chart - S & P 500 Index Year-over-Year Earnings per share Growth


First quarter earnings season is starting up and estimates are for S&P 500 earnings to potentially drop 4%; which would be the first negative quarter after seven consecutive quarterly gains. Remember though, estimates are usually exceeded and we believe there’s a good chance earnings can turn in slightly positive when all is said and done.

 

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IMPORTANT DISCLOSURES

All estimates indicated are FactSet consensus estimates.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

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