Overall, second quarter earnings have been positive, and the stock market has responded, going up about 3% over the past three weeks.
Earnings have generally been strong for health care and technology companies, weaker for energy, industrials, and transports.
The most important factor affecting corporate earnings continues to be the ongoing strength of the U.S. dollar; earnings commentary by company managements highlight the dollar’s strength as the biggest drag on reported earnings thus far in 2015, and the dollar is expected to remain a drag on earnings through the rest of 2015 and into 2016.
Earnings remain the most important part of the stock market’s ability to continue to do well, so we will remain focused on finding companies that can show good earnings growth in a challenging environment.
Stocks remain 1) mired in a range of 2040-2130 on the S&P 500, and 2) fairly close to our estimate of fair value. We continue to look for opportunities to commit capital to exceptional companies that sell at attractive long-term valuations as we work through a challenging and volatile economic and capital markets landscape.