Earnings season can be a bumpy road. If you feel like pulling your hair out while looking at your investment portfolio today, take a deep breath, and try not to panic. Stocks are flat to lower today as more companies report results, stalling the rally we had seen the past few days. After the closing bell today we'll hear from Microsoft, which might give us a preview of what to expect next week from other tech giants, including Google parent Alphabet, Apple, and Amazon.
Disappointing reports could sink shares of certain companies or stocks of entire industries and sectors. Investors are paying close attention to how well major companies are predicting their corporate performance. And with so many investors concerned about a possible recession this year, everyone is trying to read the tea leaves on what to expect going forward.
So far, 11% of S&P 500 companies have reported earnings, and it's not exactly going well—67% reported earnings that are above estimates, which is lower than the five-year average of 77%. So what does that mean? While the majority of companies are still doing fairly well, corporate performance is weakening. Not as many companies are outperforming estimates, and their performances aren't as strong.
For investors, that's not great news. But even if you aren't an investor, this is a sign that the U.S. economy is slowing down, making it harder for these companies to earn as much money as they did before. While this doesn't mean a recession is going to hit us tomorrow, we are hearing the alarm bells off in the distance. This may be the time to get prepared in case a recession does come, by paying off debts, and increasing your savings if you can.
- Kristin
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