The U.S. is still in the middle of a pandemic, with many schools shut and the daily toll of new COVID-19 cases only recently falling back to five digits. But for Corporate America, the worst may already be in the rearview mirror.
According to Goldman Sachs, earnings per share for S&P 500 companies have actually climbed in the fourth quarter. Granted, it isn’t by much — just 2% year-over-year — but that compares to expectations they would fall by 11% heading into the reports.
The materials sector, with 17% year-over-year EPS growth, is leading the advance, following by information technology and financials, each with 14% gains.
The Goldman analysis was of 367 of the S&P 500 components, representing 84% of the S&P 500’s market cap. And these gains come, the firm pointed out, with its own U.S. reopening scale registering just a 4 out of 10.
The Goldman analysts nudged up their 2021 earnings per share estimate for S&P 500 companies by 2% to $181, due to higher sales and profit margins, which will help offset cost pressures.
Fiscal stimulus may be the next upside catalyst for U.S. equities, said strategists led by David Kostin. “From a flows perspective, additional stimulus payments should continue to support household demand for U.S. stocks,” they said.
The S&P 500
SPX,
+0.47%
gained 1.2% last week and is up 76% from its March lows.
