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The quarterly earnings reporting season is past the half-way point. Of the 303 companies in the S&P 500 Index that have reported earnings to date for Q1, 87.1% have reported earnings above analyst estimates. This compares to a long-term average of 65.3% and prior four quarter average of 75.5%. The Dow Jones Industrial Average closed the week –0.5%, the S&P 500 Index was flat and the NASDAQ 100 Index was –0.6%. The U.S. 10-year Treasury bond yield increased to 1.631% at Friday’s close versus 1.567% the previous week.
This week another 139 companies in the S&P 500 Index scheduled to report earnings. First quarter earnings are expected to grow 46.3% year-over-year, an increase from last week’s expectation of 33.9% growth and 25.0% at the start of the quarterly reporting. Full-year 2021 earnings are expected to grow 32.8% year-over-year versus expectations of 29.3% growth last week and 26.5% at the start of the quarterly reporting.
Initial unemployment claims for the week of April 24th decreased to 553,000 versus the previous week at 566,000. Continuing claims for April 17th were 3.660 million versus 3.651 million the week prior. The removal of the remaining state-level economic and social restrictions are likely necessary for employment to return to pre-pandemic levels.
In our Dissecting Headlines section, we look at summer travel plans.
Financial Market Update
Dissecting Headlines: Travel Recovery
The leisure and hospitality industries were hard hit during the COVID-19 pandemic, but are starting to bounce back. According to the U.S. Travel Association, 72% of American are planning a summer vacation trip, up from 37% in 2020. More Americans view travel activities as safe with a recent poll showing that 35.1% view travel activities as unsafe versus 57.8% with that view in January and 69.4% a year ago.
A statistic that many of us can relate to is that 75% of Americans have actively dreamt about taking a trip in the past week. In fact most respondents to the survey plan to take two leisure trips this summer. The activity will still be primarily domestic with 70% saying they will travel out of state but only 10% planning to travel abroad. The car will also still remain the main mode of transportation, although 34% Americans said they plan to travel by air.
Regarding business travel, 41% of U.S. companies plan to restart domestic business travel in the next three months, an increase from 25% last month.
We have commented that the removal of remaining COVID-based restrictions are important to bring employment back to several states with still above average unemployment, especially tourist destinations such as Nevada and Hawaii. The virtuous cycle of ending restrictions, increased travel, and the resulting boost to travel, leisure and hospitality jobs looks to be a last key step to see a full economic recovery from the pandemic.
Go out and enjoy! We’ll see you when you get back!
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