The Beats Go On

By Alex Eule |  Wednesday, August 5

The Beats Go On. Earnings continue to roll in, and stocks continue to head higher. The Dow Jones Industrial Average ended up 373 points, or 1.4%, today. Thank Walt Disney, whose stock jumped 9% on an earnings report that managed to give investors hope for the future. Disney was the Dow's biggest contributor on the day. Despite a brutal quarter, Disney's profit of eight cents a share was ultimately far better than feared. 

Companies love to impress investors when they roll out earnings, and every quarter we go through a similar exercise. Companies post their results and more often than not, they're better than what Wall Street analysts were expecting. The so-called beat makes everyone happy and often stocks get a bump. In a typical quarter, 65% of companies beat estimates, according to Refinitiv.

But this quarter the beats are beating history. With more than 75% of S&P 500 companies having reported their second quarter, 83% of the results have been higher than expected. That would be the highest rate of beats on record, according to Refinitiv, who has data going back to 1994. 

Not surprisingly, the S&P 500 is now up 5.5% since second-quarter earnings season kicked off on July 14.

The Nasdaq Composite, meanwhile, continued its standout performance. The tech-heavy index closed at another record, up 0.5% for its fifth consecutive gain. The Nasdaq has 31 record closes in 2020, already tying the total number of records from last year. Technology trumps the virus. 

The tailwind for stocks could continue as Congress moves toward a fifth coronavirus relief package. Republicans and Democrats traded sharp jabs today, but White House negotiators are pushing a Friday deadline for a deal.