Corporate earnings are not meeting expectations thus far. Roughly 160 S & P 500 companies have posted third-quarter results thus far, with their bottom lines growing an average of just 2.6%, per FactSet. The blended growth rate, which includes the reports already out and estimates for those on the docket, points to overall S & P 500 earnings growing at 3.4% from the year-earlier period. Both of those are below the anticipated 4.2% earnings expansion heading into the reporting period. That number was revised down from an expected 7.8% clip from June . Some of the sluggishness can be attributed to shifts in consumer spending, according to Calamos Investments senior vice president and portfolio specialist Joseph Cusick. He pointed to data from the Bureau of Economic Analysis earlier this month that showed rising demand for services relative to goods. “U.S. consumer spending has shifted more towards services rather than goods, which benefits domestic businesses more than international ones. During the Covid-19 pandemic, there was a surge in goods purchases, but that trend has slowed down,” Cusick said. CFRA Research chief investment strategist Sam Stovall also noted that the bar for this season was especially high. Profits this time last year grew more than 5% year over year. In other words, companies will have a tougher time meeting expectations. The S & P 500 rebounded slightly from a three-day slide on Thursday due in part to strong earnings reports. Tesla, Whirlpool and PayPal all reported better-than-expected profits, sending their shares higher. Stovall thinks, however, results will improve as the season carries on. “Looking at all of the [results], I just remember prior quarters in which we started [lower], and it almost seems like a heavy aircraft taking off from an aircraft carrier. It tends to dip before gaining in altitude,” Stovall told CNBC. Companies slated to report earnings after the close Thursday include Deckers, Capital One and DexCom. Tech giants Amazon and Apple are due out next week.
