Companies with disappointing quarterly results are being punished more than usual this earnings season. Lower-than-expected second-quarter profits caused the stock to fall an average of 3.8% from two days before the quarterly report was released to two days after the report was released, according to FactSet data. By comparison, Disappointing’s five-year average price fell 2.3% over the same period. Those who beat Wall Street expectations received below-average returns. They increased just 0.3% during the same period, according to FactSet. That compares with the five-year average price increase of 1%, FactSet said. The phenomenon underscores high expectations for the season and a stock market that many believe is overheated. The S&P 500 is up more than 14% this year and currently trades at 21 times earnings. Peter Boockvar, chief investment officer at Bleakley Financial Group, told CNBC: “Some of the stocks that have performed well this year have set the bar high for earnings season and have rebounded even as earnings per share beat expectations. Expected levels. “Valuations…are definitely a challenge for a lot of stocks that have done well this year. Ford Motor Co., for example, fell more than 18% on Thursday after profit missed expectations due to warranty costs. Diabetes management company Dexcom’s stock fell 40% on the day after it reported disappointing revenue and provided weak guidance. . DXCM 5D mountain DXCM 5-Day Chart Companies that post strong results don’t necessarily see their stocks rise. For example, JPMorgan Chase’s stock price fell 1% on July 12, despite the bank’s profit and. Revenue beat expectations as investment banking fees soared 52% from a year earlier: “Many of the big leaders have been strong so far this earnings season,” Gabelli Funds portfolio manager John Belton said in an email. The company’s performance has been better than the stock reaction. “There is a continued rotational backdrop and more risk-off sentiment in the market, which I think could lead to a short-lived decline. ” This year’s strong tech-led rally has shown some signs of extending into small-cap and cyclical stocks as investors gradually exit large-cap stocks. Investors will be paying close attention to this week’s earnings reports, including Microsoft, Meta Platforms, Apple and Amazon.
