It was only a month ago when the stock market erased a year’s worth of gains in a matter of days. America was threatened by an economic infection from weakness in Europe and China. Ebola had come to U.S. soil. Energy prices were falling, taken as a sign of lower demand thanks to economic strains. Remember?
Economies and business don’t swing on emotion but the stock market can, especially in the short-term. In the month since the S&P 500 shed 5 percent in a week, the business of America has continued growing, unabated. Hundreds of companies have reported quarterly financial results in the meantime and a significant majority of them had a good quarter.
The third quarter earnings season winds down in the week ahead. Only a handful of the 500 companies making up the S&P 500 stock index are left to report. Among those on the calendar represent a cross-section of modern American business: homebuilder D.R. Horton, technology firm Cisco Systems and retailer Walmart.
Companies have become more conservative with their financial forecasts, and that bears attention for investors. However, the caution generally has not been driven by economic fundamentals, but rather issues such as a stronger U.S. dollar or company-specific challenges. GE, JP Morgan and Nike all have expressly called out the U.S. as a bright spot for their businesses.
Each earnings report tells an individual story, but woven together the corporate profits point to a growing, albeit uneven, environment for long-term investors.
Financial journalist Tom Hudson hosts The Sunshine Economy on WLRN-FM in Miami. Follow him on Twitter @HudsonsView.