Earnings season started off slow in the opening weeks of January. Of the roughly 85 companies in the S&P 500 that have reported fourth-quarter earnings, 73% were above expectations, with another 7% meeting expectations.
Among those that missed on earnings were companies in the materials, energy and industrials sectors. Technology and communications stocks all topped expectations, according to data from FactSet Research Systems. Recent history shows the number of quarterly earnings surprises to be slightly above 75%; while fourth-quarter reporting is still a small sample size, the proportion of companies reporting earnings above expectations is near its low Q4 2018 levels.
As of Dec. 31, prior to any releases, fourth-quarter earnings were expected to be 2.4% lower than the third quarter. That number has since increased to 1.9% after positive earnings surprises by a handful of technology companies. Expanding the observed period shows that should expectations remain in line with reality, Q4 would mark the fourth straight quarter for which year-over-year earnings growth declined.