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Uncovering The Potential Behind S&P 500 Q4 2023 Earnings

When the IBES data by Refinitiv failed to reach subscribers last week, readers were left wondering if this was a strategic decision since there were minimal company earnings releases. In a rather amusing irony, the receipt of the Refinitiv invoice always seems to take precedence over the actual subscription information. It’s an inauspicious start to the new year, but let’s not dwell on that.

Unveiling S&P 500 Earnings Data

  • The forward 4-quarter estimate (FFQE) concluded 2023 at $234.60, slightly lower than the mid-Dec ’23 figure of $235.77.
  • The PE on the forward estimate stands at 20.3x, just a hair above the 20x from mid-December ’23.
  • The S&P 500 earnings yield (EY) has lingered below 5% for the past three weeks, experiencing a decline in 10 out of the last 14 weeks since the 5.43% settlement on September 29th.
  • The 3rd quarter, 2023 EPS estimate concluded at $58.40, showing a growth of +7.5% compared to the +1.9% expected on 9/29/23.
  • The 4th quarter 21023 EPS estimate has plummeted from $58.14 to $54.69 since 9/29/23, with the expected growth rate dwindling from +12.7% to +5.2%.
  • Despite the sharp decline in the anticipated growth for the upcoming earnings quarter, it’s important to note that most earnings data services have failed to highlight that the rise to +7.5% from +1.9% in Q3 “actual” EPS represents a substantial “upside surprise” for the previous quarter.

The dwindling earnings yield amidst the expected Q4 ’23 earnings raises a key question – could a stronger-than-expected Q4 ’23 EPS, with significant “upside surprises” signify a robust US economy, potentially impacting Fed easing in March ’24, depending on the sector?

The illustration of the recent “upside surprise” for S&P 500 EPS over the past 8 quarters presents an intriguing trend. The notable takeaway lies in the fact that as 2022 progressed, the upside surprise lessened, coinciding with the Fed’s interest rate hikes.

Insight Into Economic Data

The forthcoming week is set to revolve around employment and jobs data, with the JOLTS update, ADP and jobless claims data, and the December ’23 nonfarm payroll report being the focal points. A historical perspective on US jobs data within the last 10-20 years provides an insightful backdrop for younger readers and investors. The consistent issue of material revisions in jobs data, such as the report, underscores the challenge of interpreting the immediate market impact amidst subsequent revisions that tend to receive scant attention.

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An ongoing area of concern is the resilient nature of the jobs data, which portrays an economy that defies the anticipated weakening despite severe rate hikes.

An Evaluation of High-Yield Credit

An evaluation of the trend in high-yield and high-grade (investment-grade credit spreads) since early November ’23 reveals an 80 basis point tightening in high-yield credit spreads over the past 8 weeks. While the high-grade spreads have experienced a substantially lesser tightening, the positive implications of the high-yield credit spread tightening for equity bulls are unequivocal.

Looking Ahead

The upcoming financial reports, such as Walgreens (WBA) before the bell on Thursday, January 4th, 2024, against the backdrop of a new CEO appointment, hold a potential narrative of dividend and guidance adjustments. The speculative nature of WBA’s recent market rally prompts introspection on whether it aligns with the broader market trend or denotes an early vote of confidence in the new CEO.

While the prevailing optimism in both the stock and bond markets provokes a degree of discomfort early in ’24, the inherent economic robustness, particularly in the jobs market, could sway the Fed’s monetary policy trajectory. With the Fed exhibiting an unusually tight stance, evidenced by the 5.25% nominal funds rate and the 2.5% “inflation expectations” data, the broad economic landscape presents an intriguing juncture for investors.

Amidst the evolving financial panorama, it’s prudent for readers to exercise caution, acknowledging the inherent volatility of the capital markets. Diving into investable assets requires a discerning approach, recognizing the potential for both favorable and adverse fluctuations.

The ongoing financial journey is enriched by the thoughtful engagement and discussions with readers, particularly those on Seeking Alpha. The year ahead promises to be an enthralling chapter, punctuated by the ever-evolving dynamics of the financial markets.


As a parting note, it’s important to underscore that none of the shared information constitutes advice or recommendations. Past performance should not be misconstrued as a determinant of future results. It’s imperative for readers to calibrate their portfolio resilience in light of market volatility. The primary source for all S&P 500 earnings data is IBES data by Refinitiv, subject to their timely transmission.

The currency of the information may vary and timeliness cannot be guaranteed. The fluidity of the capital markets warrants continual monitoring to adapt to changing dynamics. Your readership is genuinely appreciated.