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S&P 500 Earnings Guidance Trends Improving
Plus: The best ETF for anyone who needs a moderate dose of beta.
Michael Comeau    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Over the past few months, I've discussed how earnings-guidance trends for the S&P 500  (INDEXSP:.INX) seemed to be getting a bit better. (See here and here, subscription required.)

FactSet Research Systems' latest S&P 500 earnings summary indicates that guidance has clearly improved in 2014.

In Q4 2013, just 15.9% of earnings guidance was positive, marking a record low.

That number ticked up to 18.6% in Q1, and 24.3% in Q2.

And  negative guidance is 6.9% below expectations, which is an improvement over the five-year average of -10.7%.

In terms of composition, the IT, industrials, materials, and health-care sectors have been positive contributors to the trend change, while consumer discretionary has been a drag.

Of 22 consumer discretionary stocks issuing earnings guidance, just two issued positive guidance.

Unfortunately, revenue guidance hasn't improved over Q1.

In Q2, just 39.5% of revenue guidance was positive, down from 44.0% in Q1. However, it's better than the five-year average of 33% positive.

Now let's compare this to market performance by sector.

Year-to-date, the best performing sector has been utilities (Utilities SPDR ETF (NYSEARCA:XLU)) and the worst has been consumer discretionary (Consumer Discretionary SPDR ETF (NYSEARCA:XLY)), which represented a flip-flop from 2013.



I suspect that if the S&P 500 is to break through 2,000 this year, it will be due to a rebound in consumer discretionary names.

For those looking to add a moderate dose of beta, the XLY ETF is a good candidate. It is heavily weighted in large-cap growth names without the extreme volatility of something like biotech (iShares NASDAQ Biotechnology Index ETF (NASDAQ:IBB). It also has the benefit of low expectations, courtesy of the lousy guidance and year-to-date underperformance.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
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No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
S&P 500 Earnings Guidance Trends Improving
Plus: The best ETF for anyone who needs a moderate dose of beta.
Michael Comeau    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Over the past few months, I've discussed how earnings-guidance trends for the S&P 500  (INDEXSP:.INX) seemed to be getting a bit better. (See here and here, subscription required.)

FactSet Research Systems' latest S&P 500 earnings summary indicates that guidance has clearly improved in 2014.

In Q4 2013, just 15.9% of earnings guidance was positive, marking a record low.

That number ticked up to 18.6% in Q1, and 24.3% in Q2.

And  negative guidance is 6.9% below expectations, which is an improvement over the five-year average of -10.7%.

In terms of composition, the IT, industrials, materials, and health-care sectors have been positive contributors to the trend change, while consumer discretionary has been a drag.

Of 22 consumer discretionary stocks issuing earnings guidance, just two issued positive guidance.

Unfortunately, revenue guidance hasn't improved over Q1.

In Q2, just 39.5% of revenue guidance was positive, down from 44.0% in Q1. However, it's better than the five-year average of 33% positive.

Now let's compare this to market performance by sector.

Year-to-date, the best performing sector has been utilities (Utilities SPDR ETF (NYSEARCA:XLU)) and the worst has been consumer discretionary (Consumer Discretionary SPDR ETF (NYSEARCA:XLY)), which represented a flip-flop from 2013.



I suspect that if the S&P 500 is to break through 2,000 this year, it will be due to a rebound in consumer discretionary names.

For those looking to add a moderate dose of beta, the XLY ETF is a good candidate. It is heavily weighted in large-cap growth names without the extreme volatility of something like biotech (iShares NASDAQ Biotechnology Index ETF (NASDAQ:IBB). It also has the benefit of low expectations, courtesy of the lousy guidance and year-to-date underperformance.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
More From Michael Comeau
S&P 500 Earnings Guidance Trends Improving
Plus: The best ETF for anyone who needs a moderate dose of beta.
Michael Comeau    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Over the past few months, I've discussed how earnings-guidance trends for the S&P 500  (INDEXSP:.INX) seemed to be getting a bit better. (See here and here, subscription required.)

FactSet Research Systems' latest S&P 500 earnings summary indicates that guidance has clearly improved in 2014.

In Q4 2013, just 15.9% of earnings guidance was positive, marking a record low.

That number ticked up to 18.6% in Q1, and 24.3% in Q2.

And  negative guidance is 6.9% below expectations, which is an improvement over the five-year average of -10.7%.

In terms of composition, the IT, industrials, materials, and health-care sectors have been positive contributors to the trend change, while consumer discretionary has been a drag.

Of 22 consumer discretionary stocks issuing earnings guidance, just two issued positive guidance.

Unfortunately, revenue guidance hasn't improved over Q1.

In Q2, just 39.5% of revenue guidance was positive, down from 44.0% in Q1. However, it's better than the five-year average of 33% positive.

Now let's compare this to market performance by sector.

Year-to-date, the best performing sector has been utilities (Utilities SPDR ETF (NYSEARCA:XLU)) and the worst has been consumer discretionary (Consumer Discretionary SPDR ETF (NYSEARCA:XLY)), which represented a flip-flop from 2013.



I suspect that if the S&P 500 is to break through 2,000 this year, it will be due to a rebound in consumer discretionary names.

For those looking to add a moderate dose of beta, the XLY ETF is a good candidate. It is heavily weighted in large-cap growth names without the extreme volatility of something like biotech (iShares NASDAQ Biotechnology Index ETF (NASDAQ:IBB). It also has the benefit of low expectations, courtesy of the lousy guidance and year-to-date underperformance.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
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