S&P 500 Q4 2023 earnings growth surges 9%, beating expectations

The fourth-quarter 2023 earnings growth for the S&P 500 index is now projected at 9 per cent, nearly doubling the initial forecast of 4.7 per cent growth made on January 1, according to data from LSEG,.

With earnings reports in from approximately two-thirds of companies, it is evident that a majority, approximately 81 per cent, are surpassing analysts' expectations. The figure exceeds the average of 76 per cent seen in the previous four reporting periods, underscoring the strength of corporate performance in the quarter.

Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York, highlighted that much of the positive surprises stem from earnings growth rather than revenue figures. He attributed this phenomenon to companies' efforts in optimizing their operations, often through measures like workforce reductions aimed at enhancing efficiency.

Furthermore, the gradual normalisation of the supply chain has provided additional support to companies, facilitating smoother operations and mitigating logistical challenges.

Regarding revenue performance, the data indicates that 63.6 per cent of reports for the fourth quarter are surpassing analyst expectations. Although this figure is slightly lower than the average of 66 per cent observed over the past four reporting periods, it still reflects a robust performance by S&P 500 companies.

The forecast for revenue growth in the fourth quarter of 2023 has also been revised upwards, now standing at 3.4 per cent compared to the earlier projection of 2.6 per cent growth made at the beginning of the year.

In a related development, Paramount Global CEO Bob Bakish outlined the company's strategic priorities for the year in a staff memo dated January 25, stressing a continued focus on workforce optimisation as part of broader efficiency initiatives.

Overall, the latest earnings data points to a strong performance by S&P 500 companies in the fourth quarter of 2023, exceeding expectations and reflecting underlying resilience in the corporate sector amid ongoing economic dynamics.

(With Reuters inputs)