I was a guest on the Globe's investor roundtable discussion this week, where the discussion revolved around the second quarter earnings season. I had just one point to make: Earnings season hasn't been good to stocks lately.
The start of the season - with Alcoa Inc.'s report at the beginning of the week - looked like it might buck this trend, but Thursday's action is another matter. Despite an upbeat report from JPMorgan Chase & Co., which followed a good report from Intel Corp., stocks are now struggling.
The S&P 500 is up all of 5 points this week, as investors apparently continue to fret over longer-term issues, such as signs of sluggish economic growth and deflation, and an increasingly cautious Federal Reserve.
During the first quarter earnings season - which unofficially began with Alcoa's report and ended with Wal-Mart Stores Inc. - the S&P 500 fell 6.1 per cent. In the fourth quarter, the index fell 3.5 per cent.
You have to go back to the third quarter reporting season, which ran from October to November, 2009, to find gains. Then, the S&P 500 rose a slim 2.8 per cent. As for substantial gains, you need to go back even further, to the first and second quarter earnings seasons in 2009, when the S&P 500 rose 9.5 per cent and 15.1 per cent, respectively.
Analysts, strategists and journalists love to focus on earnings reports because they provide a nice snapshot of how companies are faring during the economic recovery. But investors seem to be more focused on what's ahead, and they're clearly nervous.
David Berman