Although the market has its eye on the elections and the stimulus plan, the business results have also helped the rally seen in the markets during the first week of November.
With more than 80% of the results published, we can give the results season almost closed.
EPS are being better than expected. It is not surprising that, especially in the US, corporate earnings are exceeding market expectations: the historical average is that 60% of companies publish better than expected. During this quarter, this figure was 86%.
Fuente: IBES.
The fact is that we see that the estimates for the third quarter have improved much more than what was expected in the summer:
Fuente: IBES. Los Resultados Publicados son blended (publicados + estimaciones, con un 86% de publicados)
Regarding the sectors, those that have performed better during this quarter are Health and Technology, as was to be expected.
Fuente: IBES
On the other hand, in 2021 we are expected to return to pre-covid profits during the third quarter or so. The sectors with the best projection are precisely those most harmed during this year: Energy, Consumer Discretionary and Industrials.
In conclusion, we can say that corporates earnings have been good and, surely, last week's rally was a consequence of that.