80% of S&P 500 Companies Beat Wall Street Fourth-Quarter Earnings Estimates
Three numbers to start your day:
Halfway Through Earnings Season, 80% of S&P 500 Companies Are Beating Estimates
Most companies tend to set expectations conservatively so that they can then exceed a low bar. So that 80% beat rate isn’t all that abnormal. In fact, it’s lower than the percentage of companies that topped estimates in the third quarter of last year.
But the fourth-quarter results so far do have one thing over the prior period. Year-over-year growth has returned, after big declines earlier in the pandemic. Earnings, so far, are up about 6% on average.
10-Year Treasury Note Has 1.04 Percentage Points More Yield Than 2-Year Note
That spread is a common shortcut for referring to the steepness of the U.S. Treasury yield curve, which is a chart of government bond yields of different maturities. It’s the widest spread since 2017.
It tends to be a good economic indicator when the yield curve is sloping upward and getting steeper, as it is now. The spread between the two and the 10 has more than doubled since the fall, as long-term yields have climbed faster than shorter-term ones.
Higher long-term yields mean the bond market is pricing in faster economic growth and inflation. It’s what you would expect to see coming out of a deep recession.
Plus, the Federal Reserve has made it clear it won’t be raising short-term interest rates any time soon, keeping yields low at the short end.
3 S&P 500 CEOs Announce Their Departures in 3 Days
On Tuesday, Jeff Bezos said that he would move up to executive chairman at Amazon.com (AMZN), handing the reins to AWS chief Andy Jassy.
Then on Thursday, a pair of healthcare-industry CEOs said they would be retiring soon.
(UNH) CEO David Wichmann surprised Wall Street with his plan to step down after three years in charge at the insurance giant.
He’ll be replaced by Andrew Witty, UnitedHealth’s president and head of its Optum subsidiary. Witty is just back from an eight-month leave of absence during which he assisted the World Health Organization’s Covid-19 efforts.
Merck’s (MRK) longtime CEO Kenneth Frazier will also retire later this year. That transition was telegraphed long in advance, and Frazier will remain on as executive chairman. Merck’s current CFO, Rob Davis, will take the top job in July.
Numbers by Barron’s is our daily podcast. Find out more here.
Write to Nicholas Jasinski at firstname.lastname@example.org