CWS Market Review – January 19, 2024

“There’s no shame in losing money on a stock. Everybody does it. What is shameful is to hold on to a stock, or worse, to buy more of it when the fundamentals are deteriorating.” – Peter Lynch

It seems that every time we get close to a new all-time high, the bulls suddenly get a case of the willies. Last Friday, the S&P 500 broke above 4,800 during the trading day. That hadn’t happened in more than two years. Still, shortly after, the bears stormed back and soon took control of the market.

I though the start of Q4 earnings might be a catalyst for a new all-time high. Alas, that hasn’t happened yet. FactSet, one our Buy List stocks, has crunched some of the early numbers on earnings. With 6% of the companies reporting, 76% of the stocks in the S&P 500 have beaten earnings.

The worrying sign is that earnings growth is shaping up to fall short of expectations. On New Year’s, Wall Street had been expecting Q4 earnings to rise by 1.6%. As of now, S&P 500 earnings are tracking for a decline of 0.1%. If that holds up, it will be the fourth time in the last five quarters that year-over-year earnings have declined.

In this week’s issue, I’ll unveil our Q4 Earnings Calendar, where I’ll list all of our Buy List earnings reports for this season. Next week, our first three stocks are due to report, including FICO. The credit-scoring folks have been an outstanding winner for us. The shares are up more than 200% over the last 15 months. FICO hit a new all-time high on Tuesday. Before we get to our earnings, though, let’s look at some of this week’s economic news.