Unexpectedly Intriguing!
November 17, 2016

Every three months, we take a snapshot of the expectations for future earnings in the S&P 500 at approximately the midpoint of the current quarter, shortly after most U.S. firms have announced their previous quarter's earnings. Today, we'll confirm that the trailing year earnings for the S&P 500 has indeed rebounded off its bottom, which was set in March 2016.

Forecasts for S&P 500 Trailing Twelve Month Earnings per Share, 2010-2017, Snapshot on 11 November 2016

The rebound in the S&P 500's earnings per share can largely be attributed to one factor: the rebound of oil prices following their bottoming in early February 2016.

Looking forward, we suspect that the forecast improvement in earnings currently indicated by Standard & Poor is in large part predicated on a very robust recovery in the U.S.' oil production sector. However, we suspect that forecast recovery would itself be highly dependent upon oil prices continuing to rise, where S&P is projecting that the energy sector's future earnings per share will double in 2017 over their 2016 levels, leading earnings growth across the entire S&P 500 index.

Data Source

Silverblatt, Howard. S&P Indices Market Attribute Series. S&P 500 Monthly Performance Data. S&P 500 Earnings and Estimate Report. [Excel Spreadsheet]. Last Updated 11 November 2016. Accessed 17 Novbember 2016.

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