The S&P 500 just hit a new all-time high, driven by a solid earnings season that shows U.S. companies continue to recover from the COVID economic slowdown. Today I am going to share an update on earnings season and a forecast for stocks for the last two months of the year.
Overall third-quarter earnings season has been pretty solid. About half the S&P 500 has reported earnings and 80% of those companies have beaten earnings expectations. Analysts are now expecting S&P 500 profits to grow by 38.6% from last year, showing the the largest companies in America are successfully recovering from the COVID economic decline.
Below is a breakdown on revenue growth for the 12 sectors of the S&P 500.
Notice how energy revenue is surging – me and my clients have been benefiting from this trend after I recommended food and energy stocks last spring. Click the link below to review my report and recommendation.
The good news on Q3 earnings has given stocks a nice boost. The S&P 500 gained 5.6% in October, its best month since November of 2020. That gain sent the leading index into a new all-time high. Take a look below at the S&P 500 chart for 2021.
As you can see in the chart, stocks saw their biggest pullback of the year in September and October. This is exactly what I predicted – because historically September and October are two of the most volatile months of the year for stocks. This is why I told my clients that I would be looking to deploy extra cash in October. Here’s what I said in August.
“Another reason for caution – September and October are historically two of the weakest months of the year for stocks. After October, US stocks move into the strongest 6-month cycle of the year, from November through April. Any weakness in September and October is an opportunity to buy low ahead of the bullish cycle from November through April.”
And this is exactly what I did – I was very busy in October deploying cash into funds and stocks. And looking forward, stocks are in position to close the year on a strong note. After October, US stocks move into the strongest 6-month cycle of the year, from November through April. Take a look at the chart below of monthly gains.
Hopefully this gives everyone a pretty solid update on what’s been going on with stocks, how I have been managing client funds and what we should expect in the last two months of the year.
I’ll be back with another update next week – have a great day!
Disclaimer: This report is for entertainment purposes only. Every investor should consult with an investment advisor before making investment decisions. The Vodicka Group, Inc. is not a broker/dealer. We do not receive compensation for mentioning stocks. At various times, the clients, publishers and employees of Vodicka Group, Inc., may buy or sell the securities discussed for purposes of investment or trading.