[Ed. – This analysis seems a little, um, narrowly scoped. When things are in as much flux as the Bloomberg write-up indicates, with companies all but abandoning earnings analysis and estimates for the moment, the first question isn’t why people are buying; it’s WHO is buying. That would go a long way toward sussing out the why. It’s an interesting situation. Time to give voice to the question: who will have controlling interest in some major companies when this is over? And who will have what to sell – and when? Those who buy big in the current situation aren’t buying for mere trading-profit or portfolio-boosting reasons.]
At first glance, the 44% profit contraction expected for S&P 500 companies — the worst since 2008 — seems at odds with with the explosive rally that’s restored most of what was lost in the March meltdown. Yet Wall Street pros will know the stock market long ago discounted all that. It’s not recent history that matters, but rather expectations for the future.
Those remain murky. Crafting an outlook for the broader economy or individual companies remains all but impossible in a recession spurred by a global health-care crisis. To date, most companies themselves haven’t even bothered.
So few firms issued profit guidance in June — just 17 — that Bank of America strategists wrote in a report this week that the data was “too sparse to analyze.” Over the last three months, 400 companies in the S&P 500 failed to provide guidance, BofA data show, a record going back to at least 2001.
“Corporate sentiment is neither positive nor negative, but simply a big question mark,” said strategists including Savita Subramanian.