A solid corporate earnings season has bolstered the case for stocks.
Recent developments have had many investors expecting rockier trading in the coming months, following an 18% advance in 2021 that has taken the S&P 500 to 44 record closes. The rapidly spreading Delta variant of the coronavirus has cast a cloud over the economic outlook, and rising prices have sparked debate over whether sustained inflation will hamper the recovery. China’s crackdown on corporations, meanwhile, has analysts considering the possibility of a drag on U.S. markets.
With these potential hurdles coming into view, investors have been heartened by a standout earnings season in which the share of big U.S. companies beating profit expectations is on pace for a record. What’s more, companies are turning more of their sales into earnings, keeping profit margins at record highs.
“The earnings coming out have definitely helped alleviate concerns of investors that maybe earnings are not going to keep up with the pace of the stock market,” said Gene Goldman, chief investment officer at Cetera Financial. “They’ve kept up pace.”
While the bulk of earnings reports are in, investors this week will parse results from companies including Tyson Foods Inc., eBay Inc. and Walt Disney Co.
