Takeaways From Second Quarter Earnings Season

We would say the most important takeaway from the now-completed second quarter earnings season is that earnings are still growing and an earnings recession appears to be off the table for now. While FactSet’s math said the S&P 500 Index overall produced flat EPS year over year, other sources such as Refinitiv (former Thomson Reuters) reported operating earnings growth of over 3%. Boeing’s multi-billion charge during the quarter detracted 1.5% from S&P 500 EPS by itself, which appears to be a unique event that shouldn’t recur.

Overall, we think corporate

August’s jobs report was weaker than expected, showing that corporate hiring has slowed a bit recently.

Nonfarm payrolls rose 130,000 in August, below consensus expectations for a 164,000 gain despite a 25,000 bump from temporary jobs related to the 2020 Census. As shown in the LPL Chart of the Day, Jobs Growth Slows in August, July’s job increase was also revised down to 159,000, pulling the 12-month average payroll change down to a still-solid 173,000.

We still see tailwinds for the U.S. labor market, though. Payrolls are still growing at an above-average trend for the cycle (when looking

We remain fans of diversification, including geographic diversification for suitable equity portfolios. Sticking with that approach has been trying in recent years, however.

As shown in the LPL Chart of the Day, Struggles for International Stocks Continue, stocks in developed foreign markets, represented by the MSCI EAFE Index, have trailed those in the United States significantly and consistently for the past decade. The story is the same for emerging market (EM) stocks.

We maintain developed international equity allocations in our strategic portfolios with long time horizons. At some point, the tide w

U.S. manufacturing contracted in August for the first time since January 2016 as trade uncertainty continued to weigh on the sector.

The Institute for Supply Management’s (ISM) manufacturing Purchasing Managers’ Index (PMI), fell to 49.1 versus consensus expectations of 51.3, a meaningful decline from July’s 51.2 reading (above 50 is considered expansionary territory).

Underlying details in the report showed more weakness could be ahead. ISM’s new orders sub-index, which tends to act as a leading indicator for manufacturing health, fell to 47.2. That’s one of the lowest readings of the c