From last week’s jobs focus, we shift our attention to earnings this week. Alcoa, the aluminum giant, kicks off the fourth-quarter earnings season after the market’s close today. Later in the week, a few blue chip names, like Intel and JP Morgan, report their results. The reporting season gets into high gear from next week onwards.
Corporate earnings have been a clear standout in this recovery, and the trend should continue into the fourth-quarter earnings season. Expectations are for gains of about 20% in the fourth quarter, which would make full-year 2010 earnings at about 45% above the 2009 level.
This is stellar performance by any measure, but particularly so when viewed relative to how the U.S. economy and labor market have fared coming out of the Great Recession. An additional 15% gain this year would put us above the prior earnings peak reached in 2007. At this pace, we are on track to earn in excess of $100 in S&P 500 ‘EPS’ in 2012, the first time in the index’s history.
I am not looking for fresh market gains solely on the back of another solid earnings season. It is hardly ‘news’ at this stage.
For the market to head higher, we need to see much better reports on the U.S. labor market than was the case last Friday.
Sheraz Mian
P.S. What is Zacks Ahead of Wall Street? To find out more about Zacks Ahead of Wall Street, click here.
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