(News Bulletin 247) – After a hesitant opening, the New York Stock Exchange headed higher on Monday morning, driven by a wind of optimism at the start of the quarterly earnings season, which could reflect the good health of the economy on corporate profits.
At the end of the morning, the Dow Jones thus rose by 0.1% to 34,559.8 points, while the Nasdaq Composite advanced by almost 0.5% to 14,176.8 points.
In a buoyant economic environment, marked in particular by resilient consumption and ebbing inflation, investors will closely monitor quarterly results to see if the current market valuation is justified.
The S&P 500, which has climbed 17% since the start of the year, is currently trading at a P/E of nearly 20, compared to a historical average of 17 over the past ten years.
Given the good resilience of activity, investors are starting to think that the upcoming earnings season could hold some good surprises and offer additional support to the equity markets.
Because the publishing season has so far been better than expected.
According to FactSet data, 80% of S&P 500 companies reporting earnings beat analysts’ earnings forecasts, a figure well above the 73% recorded over the past decade.
Among the strongest increases in the S&P index, Tesla (+1.3%) and Netflix (+2.7%) thus benefit from a buying trend before the publication, this week, of their quarterly results.
Ford drops nearly 5% following the announcement of an increase in capacity at its Michigan site associated with the fall in the price of raw materials for batteries, which will allow it to reduce the selling price of its pick-up electric F-150 Lightning.
GM drops 3% in its wake.
Investors’ optimism about the upcoming quarterly results more than offset disappointing economic indicators from China, which returned this morning to renewed concerns about the health of the global economy.
The announcement of a less marked decline than expected by the Fed’s Empire State index, testifying to the resilience of the manufacturing sector, also supports the trend.
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