After a mediocre September for the stock market, October may bring news that boosts share prices as the fourth quarter progresses. That’s because third-quarter earnings season begins in earnest the week of Oct. 12, and expectations for S&P 500 (SNPINDEX: ^GSPC) companies, which represent about 80% of the total U.S. stock market capitalization, are very high.
According to FactSet, which tracks company earnings, the S&P 500 is expected to post year-over-year earnings growth of 29.5% for the third quarter, which would mark the third consecutive quarter of earnings growth above 25%.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Not only is that an impressive pace of growth for corporate earnings, but that estimate has been rising. At the beginning of the third quarter, estimated earnings growth for the quarter was 26.7%, but upward revisions to analysts’ earnings estimates have pushed it higher over the past three months.
And third-quarter earnings growth is expected to be broad-based. All 11 sectors of the S&P 500 are expected to post growth in the quarter, and five sectors — energy, information technology, communications, materials, and industrials — are projected to post double-digit growth.
Over the long run, stock prices follow earnings because corporate profits reveal a company’s fundamental value. So, if S&P 500 third-quarter earnings perform as expected, it should be very good news for investors.
Should you buy stock in S&P 500 Index right now?
Before you buy stock in S&P 500 Index, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and S&P 500 Index wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $375,887!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,459,146!*
That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul.
