Markets in a Minute - Mother's Day Rally?
By: Zac Martin
Author: Zac Martin, Senior Investment Analyst
Week Ending May 8th – Mother's Day Rally?
A strong week for equity markets as companies report robust Q1 earnings. Nearly all S&P 500 constituents have reported results and of the 89% that have reported, 84% have beaten EPS estimates and 80% have beaten revenue estimates, according to FactSet. This is an exceptionally strong upcycle in earnings with the current beat rate being 84%, which is the highest since Q2 2021. Additionally, the 84% beat in EPS estimates is well above the 5- & 10-year averages of 78% and 75%, respectively. Furthermore, the blended net profit margin for the S&P 500 is expected to be 14.7%, given the current reports, this would be the highest net profit margin recorded since FactSet began tracking this in 2009. The previous record was 13.2% and was set last quarter.
Currently, the S&P 500 is expected to grow EPS by a blended growth rate of 24% for the calendar year 2026, versus the estimated 15% last month. Given where current S&P multiples are this could continue to be a significant tailwind for US equities.
Employment Situation: Nonfarm payrolls for April increased by 115k, which was well above the consensus estimate of 67.5k. Healthcare continues to be the largest job creating sector, adding 37k jobs in April, however, transportation and warehousing added an additional 30k. More signs that the economy is experiencing a broader increase. Additionally, the unemployment rate remained unchanged at 4.3%.
The Week Ahead:
- Consumer Price Index for April (5/12)
- Producer Price Index for April (5/13)
- Retail Sales (5/14)
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