Fourth-Quarter Earnings Results Not Changing Outlook for More Than a Third of Investors

This week’s Sentiment Survey special question asked AAII members what influence fourth-quarter earnings are having on their outlook for stock prices. Slightly more than a third of all respondents (36%) say the recent profit announcements are not having an influence. Some of these respondents say monetary policy matters more, while others say politics and/or trade issues are having a bigger influence. Nearly 23% express a negative view about earnings or earnings guidance. Several of these respondents think earnings growth has peaked or pointed to negative 2019 earnings estimate revisions. About 17% view corporate earnings as being positive or otherwise confirming an ongoing trend of growth.

Here is a sampling of the responses:

• “Earnings are important, but the Fed’s influence has more impact on prices.”
• “They contribute to the belief that equity prices will go down in response to declining economic activity.”
• “The generally high earnings have helped me to be bullish on the market.”
• “The downward revisions to 2019 earnings had more influence on my outlook than fourth-quarter earnings did.”
• “Not much! The market is very sensitive to news and wide fluctuations are the norm.”

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