Third-quarter earnings season is nearly three weeks in the books and “tepid” is an apt descriptor at this point. A little less than two-thirds of the S&P 500 components that have reported thus far have topped EPS estimates and a disappointing 52% have beaten revenue estimates.
Predictably, some sectors have fared better than others in terms post-earnings performances. “The average Materials stock has gained 1.79% on its report day, while the average Health Care stock has gained 1.3%,” according to Bespoke Investment Group.
Bespoke noted that the average consumer discretionary name has slid almost half a percent on its report day while technology stocks, on average, have been more than twice as worse with losses of 1.14%. [Sector Trends Show Investors Turning Defensive]
However, discretionary and technology sector ETFs are defying the aforementioned earnings lethargy. Using former Dow component Alcoa (NYSE: AA) as the marker to start earnings season, the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) has jumped 6.2% since October 8 while the Technology Select Sector SPDR (NYSEArca: XLK) is higher by 5.7%. [Icahn’s Impact on Apple ETFs]
Chart Courtesy: Bespoke Investment Group
Those performances clearly defy the one-day report-day trends previously outlined. More post-earnings gains could be on the way for XLK and XLY. On Thursday, Dow component Microsoft (NasdaqGM: MSFT) jumped 5.3% after-hours following the release of its quarterly results. The stock is XLK’s third-largest holding at almost 8.1%.
Shares of Amazon jumped nearly 8.3% after the e-commerce giant delivered its results. The stock is XLY’s second-largest holding.
To be fair, the Materials Select Sector SPDR (NYSEArca: XLB) and the Health Care Select Sector SPDR (NYSEArca: XLV) have been on tears since October 8. XLB is up 6.6% while XLV is higher by 5.5%.
As for richly valued defensive sectors, their earnings performances may not be setting the world on fire, but the iShares Dow Jones Telecom ETF (NYSEArca: IYZ) and Consumer Staples Select Sector SPDR (NYSEArca: XLP) are among the top performing sector ETFs over the past month, rising 5.9% and 5.3%, respectively, compared to the S&P 500′s 3.8% gain.
Materials Select Sector SPDR
Tom Lydon’s clients own shares of Amazon and Microsoft.