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Q1 US EARNINGS SEASON ON PACE TO BE BEST SINCE 2021, BUT CONSUMER OUTLOOK WEAK

S&P 500 companies are on track to post their biggest first-quarter earnings growth since 2021, according to Savita Subramanian, equity & quant strategist at BofA Securities.

The season "has blown past expectations," she writes in a note Monday. Based on results from 445 of the S&P 500 companies, the S&P 500 .SPX is on pace to deliver 26% EPS growth year over year, she says, but that growth is at 18% if one excludes large one-time gains recognized by Amazon.com AMZN.O, Alphabet GOOGL.O and Meta Platforms META.O.

In addition, she says, "strength isn't confined to mega-cap Tech," with the median stock increasing EPS by a solid 12% year over year.

Results suggest robust demand in artificial intelligence and a "broadening industrial recovery," she notes.

But not all is positive, with weakness seen in the consumer space. Among comments from companies, she notes that McDonald's MCD.N flagged weakness among lower-income consumers.

In addition, she says, "although April jobs beat expectations... and layoff talk remains contained outside of Tech, BAC aggregated credit and debit card data... notably softened last week - could just be a blip, or an early sign that higher gas is taking a toll."

(Caroline Valetkevitch)

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