Greetings Friends,
Third quarter earnings season is peaking – and the results have been excellent.
More than half of the S&P 500 has reported earnings. According to data from Zacks Investment Research earnings are up 8.7% from the same period last year on 6.7% revenue growth. 76% of company’s have beaten earnings estimates while 66% have beaten revenue estimates.
A number of important companies reported better than expected third-quarter earnings this week – propelling their shares and the S&P 500 into new all-time highs.
The technology sector is officially on fire. Tech has been burning up the charts and leading the entire stock market higher.
Amazon (AMZN) destroyed earnings expectations and shares jumped 13% in one day. Amazon is having a ridiculous year. Shares are up 47% in 2017. A lot of my wealth management clients own this stock – congrats you’re killin’ it. Take a look below.
Alphabet (GOOG) also reported a great quarter, with revenue up 25% from last year. This is another widely held stock among my clients. Shares jumped 5% on the news and are now up 35% in 2017 with two months left in the year.
Netflix (NFLX) beat expectations and provided an optimistic forecast for the rest of the year. After jumping back to the 52-week high Netflix is now up 61% in 2017.
These strong earnings reports and share prices have lifted the broader stock market to a new high.
The tech heavy Nasdaq 100 (QQQ) is up 29% on the year.
The S&P 500 is up a very respectable 17%.
International markets are looking strong too.
Vanguard International ETF (VT) is up 20%.
Emerging Markets (EEM) are up 32%.
Cannabis Stocks have Also Been Strong
Cannabis stocks were weak for a few months this spring but they have come roaring back so that’s great to see.
The Canadian cannabis index is up 24% in the last two months.
Many individual cannabis stocks such as Canopy Growth Corp (TWMJF) and Aphria (APHQF) are both up more than 100% from their recent lows and trading back at the all-time high.
What Should We Expect for the Last Two Months of 2017?
After another strong year US stocks do look a little over valued compared to historical averages. That’s the biggest knock against US stocks you’ll see in the financial media.
However, I am expecting a strong close to the year for three reasons.
#1 Earnings will close the year at an all-time high and continue to expand to new all-time highs in 2018.
Earnings are the single most important factor fr stocks. This continued earnings growth puts a tailwind behind the S&P 500.
#2 stocks are entering the strongest part of the year. The 6-months from November to April have historically been the strong part of the yer for stocks. November and December both have a history of being very good months for US stocks.
#3 stocks have a lot of upward momentum right now. The path of least resistance is still higher. I expect that upward momentum toset the stage for a strong finish to the year.
It’s looking like another solid year for the stock market. Investors have something to feelgood about.
I’ll be back in a few weeks with another update.
Have a great week!
Your Investment Partner,
Mike
