The Week in Review: February 24, 2025
Earnings Impress
On January 13th, the Wall Street Journal published an article entitled “Investors Hope Earnings Season Can Revive Faltering Stock Rally—With the Fed unlikely to cut interest rates as quickly as hoped, corporate earnings growth becomes even more critical. “Sources: U.S. Treasury, MarketWatch
It’s not unusual for a financial website to write a story expressing concerns about the upcoming earnings season—in this case, Q4 2024.
As the season unfolds, we typically see firms top conservative profit estimates, and Q4 was no exception, per LSEG. As the new year began, LSEG expected S&P 500 companies to report a 9.6% rise in profits compared to one year ago (estimate published by LSEG as of January 1).
With 85% of companies having reported Q4 results, LSEG’s survey pegs Q4 profit growth at 15.7%, the best showing in three years. That’s well ahead of the early forecast.
In part, strength in profits among some of the large tech firms is helping drive earnings growth. In part, the economy is expanding, and the public is spending money, which also supports corporate profits.
Stronger profits contributed to rising stocks during the current earnings season, and the S&P 500 Index achieved record closes last Tuesday and Wednesday, according to MarketWatch. These records occurred before a selloff at the end of the week.
Other factors also influence the direction of equities, such as interest rates and the economic outlook. Furthermore, developments related to tariffs may affect the economic outlook. Anxieties about tariffs have been an on-again, off-again headwind over the last month.
While the movement in stocks doesn’t have an immediate one-to-one correlation to corporate earnings, over a longer period, earnings growth over the long term is the main reason stocks move higher.
Market Summary
Please do not hesitate to contact me with any questions or concerns.
I hope you have a great week!
Bill Stordahl, CFP®
Managing Director
Stordahl Capital Management
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1. The Dow Jones Industrials Average is an unmanaged index of 30 major companies which cannot be invested into directly. Past performance does not guarantee future results.
2. The NASDAQ Composite is an unmanaged index of companies which cannot be invested into directly. Past performance does not guarantee future results.
3. The S&P 500 Index is an unmanaged index of 500 larger companies which cannot be invested into directly. Past performance does not guarantee future results.
4. The Global Dow is an unmanaged index composed of stocks of 150 top companies. It cannot be invested into directly. Past performance does not guarantee future results.
5. CME Group front-month contract; Prices can and do vary; past performance does not guarantee future results.
6. CME Group continuous contract; Prices can and do vary; past performance does not guarantee future results.