The mother's milk of stock market performance is corporate earnings. If you want to know why stocks have been on a roll over the past two years, it's been the continued increase in corporate earnings. {More on this tomorrow.} Corporate earnings are now at historic levels. Here's
Chart of the Day's chart {above} and their commentary:
"With earnings season just around the corner, today's chart provides some long-term perspective on the current earnings environment by focusing on 12-month, as reported S&P 500 earnings. Today's chart illustrates how earnings declined over 92% from its Q3 2007 peak to Q1 2009 low which brought inflation-adjusted earnings to near Great Depression lows. Since its Q1 2009 low, S&P 500 earnings have surged to all-time record highs. To further illustrate the significance of the current corporate earnings recovery, consider that the run-up in real earnings from Great Depression lows to credit bubble peak took over 74 years. The run-up from financial crisis lows to today has been similar in magnitude (actually slightly more) but was accomplished in a mere five years. In the end, S&P 500 earnings are currently at all-time record highs."
Link: Chart of the Day.com: Earnings. {Paywall on main site.}
*Long ETFs related to the S&P 500 in client and personal accounts although positions can change at any time.
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