Unexpectedly Intriguing!
August 18, 2020

Every three months, we take a snapshot of the expectations for future earnings in the S&P 500 (Index: SPX) at approximately the midpoint of the current quarter, shortly after most U.S. firms have announced their previous quarter's earnings.

The latest forecast for S&P 500 earnings through the end of 2020 suggests a slightly deeper earnings recession than the forecast from the Spring 2020 snapshot, showing the continuing drag from the Coronavirus Recession. At the same time, S&P continues to optimistically project a robust recovery for earnings in 2021.

Forecasts for S&P 500 Trailing Twelve Month Earnings per Share, September 2014-December 2021, Snapshot on 13 August 2020

The earnings forecast data suggests that the last three months of the coronavirus recession in the United States has been much less damaging to the earnings prospects of the firms that make up the S&P 500 index than its first three months. This snapshot captures the positive development of the earnings recession getting worse at a much slower pace, which is a precursor to it bottoming out and beginning to recover.

As you can see in the historical expectations for the S&P 500's earnings per share that are shown in the chart, S&P has a history of making optimistic projections. Changes in S&P's projections for 2021 will be something to watch in the next few months.

Data Source

Silverblatt, Howard. Standard & Poor. S&P 500 Earnings and Estimates. [Excel Spreadsheet]. 13 August 2020. Accessed 15 August 2020.

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