Key Points:
- Median Q2 S&P 500 earnings grew 6% y/y while revenues rose 4%. EPS beat by 3%.
- Health Care had the best quarter, with 6% revenue and 12% EPS growth, and among the best beats for both.
- Material and Cyclical were weak, with below average revenue growth and almost no earnings growth.
- Median y/y Q2 S&P 600 EPS grew just 2% y/y, even with a 4% upside surprise, while revenues rose 4%.
- Staple and Technology had the best quarters, well above overall median EPS growth.
- Cyclical and Financial were weak, with -4% and 0% EPS growth, respectively.
- Forward estimates continue to fall. Median Q3 S&P 500 earnings are expected to grow 3%, down 1.2% from 90 days ago. Median Q3 S&P 600 earnings are expected to be flat, down 4% from 90 days ago.
- 2020 EPS estimates are probably too high, but as long as we do not slip into an earnings recession, we remain hopeful of the bull’s continuation.
- Indices are just below their 50-DMA, and nine of 11 sectors remain below that level as well. We remain in an Uptrend Under Pressure until this improves.
- We have 58 USFL names, still above the long-term average of 50. However, only a few are currently actionable.
- American Tower ( AMT ), Applied Materials ( AMAT ), Ceridian ( CDAY ), Fleetcor ( FLT ), Hubspot ( HUBS ), Interxion ( INXN ), Keysight ( KEYS ), Motorola ( MSI ), and Twitter ( TWTR ).
