The US is still in the middle of a pandemic. Many schools are closed and the daily number of new COVID-19 cases has just recently dropped to five digits. But for Corporate America, the worst may already be in the rearview mirror.
According to Goldman Sachs, earnings per share for S&P 500 companies actually rose in the fourth quarter. Granted, it's not much – just 2% YoY – but that's on par with expecting them to fall 11% in the reports.
The materials sector, with EPS growth of 17% year-over-year, leads progress, followed by Information Technology and Finance with 14% growth each.
Goldman's analysis included 367 of the S&P 500 components, which is 84% of the S&P 500's market capitalization. And those gains are coming, the company insisted, with its own U.S. reopening scale that only registers 4 out of 10.
Goldman analysts have raised their 2021 earnings per share estimate for S&P 500 companies by 2% to $ 181 due to higher revenue and profit margins, which will help offset cost pressures.
Tax incentives could be the next upward catalyst for US stocks, said strategists led by David Kostin. "From a flows perspective, additional stimulus payments should continue to support household demand for US stocks," they said.
The S&P 500
up 1.2% last week and up 76% from March lows.