After cratering in late March. The major averages bounced off their lows for the year. Continuing their run for the stars in what me worry fashion. Since last Friday the S&P 500 has gained 169 points or 2.34%, the NASDAQ has jumped 1,133 points or 4.51% while the DOW added 110 points or .22%.
Earnings Reporting
Is wrapping up in fine form. FactSet Research reports that 89% of the S&P 500 companies have reported 1st quarter results so far. 84% have beaten their earnings number. With the index showing the highest earnings growth rate since late 2021. Led by the technology sector and several Magnificent 7 companies pushing earnings growth of 27.7% so far. Ten of eleven sectors have reported earnings growth for the quarter. Revenues are also coming in strong posting a double digit gain of 11.3% so far. If this number holds it will be the highest revenue growth rate since the 2nd quarter of 2022. So much for the doom and gloom crowd as they continue to miss by a country mile.
Valuations
Continue to rise as stocks have been on a tear since April. With the S&P 500 showing a forward P/E of 21 at the end of March. Essentially the low for the year, and slightly above average. It has of course risen since. With earnings expectations of 19.9, 23.2 and 20.7% respectively for the remining quarters this year. P/E Ratios should be held in check even if the markets continue to rise, as seems likely.
Housing Affordability
Has been a significant complaint for 1st time and move up buyers since the outsize run by real estate prices during the depths of the Covid period. As usual supply and demand are the 2 primary determinants of price. During Covid demand surged as everybody was suddenly stuck in their homes. Fast forward to the present and the 12 month period through March saw the completion of 1.41 million housing units. Enough for about 3.2 million people based on average household size. With the crackdown on illegal migration and closing of the southern border. The Census Bureau is expecting population growth to slow to under 800,000 people annually. With completions catching up to demographic trends. Real estate affordability should improve, not just for buyers, but renters as well.
Have a great weekend. I’ll be back soon.
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