Numerous U.S. companies are defying analysts' predictions for a slow quarter, according to Reuters.
Though the quarter is still expected to be a historic low in general, 82.1 percent of companies, including Google, Amazon, Facebook and Apple have surpassed profit expectations. The number is the highest in the history of Refinitiv IBES data going back to 1994, Reuters reported. Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey, said it proved there were “pockets of absolute strength in corporate America.”
The number is also more than what the typical boost would be, with S&P 500 companies having beaten expectations by around 21.7 percent, the highest on record since 1994 as well, Reuters wrote.
Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, said the second quarter had been rife with uncertainty, moreso than any he'd ever seen, with the world “flying blind” in an unprecedented situation.
That said, Tuz saw some room for optimism based on the new numbers, saying they had “brought results that are generally better than the worst imaginable. ... Things are a little bit more positive than many people thought,” Reuters reported.
But the surge might not be indicative of a longer-term success story. The numbers could have been easier to beat because of the extremely low predictions based on the coronavirus pandemic's economic destruction, Reuters wrote.
And Reuters quotes Bank of America strategists saying that while the margins were beating expectations, they could still collapse in the long run. And based on what companies told the strategists, more job cuts could be ahead.
The recent news of the GDP crash showed that the economy contracted 32.9 percent, the biggest drop since the government started recording that data in 1947. It also managed to undo 11 years of progress since the Great Recession in 2008. The crash was caused primarily by people staying at home since March due to the numerous nationwide shutdown orders during the pandemic.