S&P 500: Stocks and earnings don’t always travel in the same direction – Charles Schwab

The relationship between corporate earnings and stock prices is quite a bit more complicated than what’s inferred by classic phrases like ‘earnings are the mother’s milk of stock prices,’ Lizz Ann Sonders from Charles Schwab reports.

Key quotes

“S&P 500 companies have so far reported earnings that are 6.3% below expectations, which compares to an average of 3.3% above expectations since 1994.”

“Net earnings revisions do tend to track more consistently with how stocks are performing; and my best guess is that there are more downward earnings revisions to come.”

“Perhaps I’m being naive, but I would think the ride will remain quite bumpy—at least throughout the remainder of earnings season.”