Taking Cues From the Market

April 28, 2020 | Jessica Noviskis, CFA, Senior Research Analyst, Hedge Funds

Amid today’s extraordinary levels of uncertainty and speculation, we welcome anything that can offer some sense of visibility. Earnings season tends to be just that, giving public companies a platform to formally update the market on their recent performance and future outlook. While guidance in this environment is not what it normally is, the market’s reaction to what is said offers insightful perspective into the thought process of active participants.

During the first two weeks of earnings season, we heard from companies across sectors, representing almost a quarter of the S&P 500 Index’s market capitalization. For this analysis, we focus on the change to consensus current fiscal year (FY1) EPS estimates. This should not only capture actual results reported, but the outlook for the rest of the year. For companies that have already reported, estimates have come down more than 20%, with an initial modest revision going into earnings and a larger cut post the report.

On average, stocks were flat across sectors despite these major cuts to earnings expectations. Certain sectors particularly stand out — FY1 EPS expectations for Energy stocks came down an additional 42% after earnings reports and stocks were up 1% in response while Consumer Discretionary expectations were cut an additional 33% and stocks rose 6% on the news. While there are nuances not captured by these averages, from a high level it implies company results and outlooks were roughly in line with buy-side expectations — in some cases better — refuting one of the oft-cited catalysts for a correction to the rebound that some argue has gone too far too fast.

We do not claim to know where the market is headed from here, but early signs from earnings season give us reasons to be optimistic that, for now, the bottom is in.

Print PDF > Taking Cues From the Market


The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Jessica Noviskis, CFA
Senior Research Analyst, Hedge Funds

Get to Know Jessica

Related Content


Is the Worst Behind Us?

The 10-year Treasury yield broke through a key threshold yesterday closing at 0.77%, its highest in eight weeks, and ending…


Bank Loans vs. High Yield: Is One Safer Than the Other?

Year-to-date, bank loans and high yield bonds have been subject to a variety of market forces similar between the two…


Don’t Mind the Gap

On the surface it looks disjointed. We are in the midst of what is likely the worst recession since the…


The Confluence of Small-Cap Stocks and the Economy

Small businesses are often thought of as the backbone of the U.S. economy. Long before the coronavirus, the Russell 2000…


Brighter Lights at the End of a Shorter Tunnel

Biotech company Moderna’s announcement earlier this week that its coronavirus vaccine successfully helped healthy adults produce antibodies against COVID-19 sent…


There’s FAAMG and Everyone Else

Since the S&P 500 bottomed on March 23rd, the stock market has taken off while economic fundamentals have worsened. As…

More articles

Subscribe to Research Email Alerts

Research Email Alert Subscription

Research alerts keep you updated on our latest research publications. Simply enter your contact information, choose the research alerts you would like to receive and click Subscribe. Alerts will be sent as research is published.

We respect your privacy. We will never share or sell your information.

Thank You

We appreciate your interest in Marquette Associates.

If you have questions or need further information, please contact us directly and we will respond to your inquiry within 24 hours.

Contact Us >