A good vintage

With the volatility seen in stock markets at the beginning of August, the publication of Q2 earnings has somewhat moved in the background for investors. With most of the result season now behind us, the good news is that US companies have shown very solid results in Q2. 56% of S&P 500 firms beat consensus EPS forecasts by more than a standard deviation of estimates, above the long-term average of 46%. Earnings per share increased by 11%, let by utilities and info tech. The magnificent 7 stocks were again the major driver of the results ( +36%) while the remaining 494 stocks of the S&P 500 grew by 6%. We are reassured by the result season as it is ultimately company fundamentals that are driving stock prices, not the short term moods of Mr Market.