Soft Landing

As of Friday's close, 85% of S&P 500 companies had reported their Q3 results. 70% of companies posted earnings and sales above what the market expected. Earnings and top-line growth reached 2% and 10%, respectively. All of the above occurs in an environment of rising reference rates and a probable economic recession.

It is still too early to draw conclusions—the rate-hike cycle has not yet concluded and activity has not entered recessionary territory—but there are factors to suggest that the

resilience of the U.S. stock market would be greater than anticipated.

Operating margins are at record highs (13.4% in Q3) despite cost pressure, staff shortages and supply-chain problems.

On the other hand, there is a natural rebalancing between sectors. Energy and real estate companies lead the gains while communications and financials have a quarter to forget. Thus, whoever invests at the aggregate level obtains a moderate result, mitigating losses.

While this earnings season has not been exceptional, we might be facing a soft landing of the U.S. stock market. Where do I sign?

Link to the original publication: https://digital.lasegunda.com/2022/11/08/A/UU46U5I1