Second-quarter earnings season continues in force this week — and it hasn't been to bad so far on a statistical basis.
To date, 26% of the companies in the S&P 500 have reported actual results for the second quarter of 2020. In terms of earnings, the percentage of companies reporting actual EPS above estimates (81%) is above the five-year average, notes John Butters of FactSet.
“In aggregate, companies are reporting earnings that are 11.4% above the estimates, which is also above the five-year average. In terms of sales, the percentage of companies reporting actual sales above estimates (71%) is above the five-year average.”
With an avalanche of big names reporting this week, here are a few exchange traded funds to consider as earnings plays in the week ahead.
SPDR Dow Jones Industrial Average ETF (DIA)
Several members of the Dow Jones Industrial Average, including Intel (NASDAQ:INTC) and Microsoft (NASDAQ:MSFT) last week, have already reported, but this is an epic week of updates for components of the SPDR Dow Jones Industrial Average ETF (NYSE:DIA).
Technology Select Sector SPDR (XLK)
Speaking of Apple, the Technology Select Sector SPDR (NYSE:XLK), which slipped 1.53% following reports from Intel and Microsoft, allocates over 21% of its weight to Apple, so this is a big week for XLK and related ETFs.
“Apple’s expertise in packaging hardware, software, and services sets it apart from the competitors in the technology sector,” according to Morningstar. “Although the narrow-moat company’s strengths can be found in the increased engagement from users in the app store, video, music, and cloud services, Apple will feel the impact of the decreases in Apple care and advertising sales. The company’s supply and demand will also feel the impact of the coronavirus for the rest of 2020.”
Industrial Select Sector SPDR (XLI)
The Industrial Select Sector SPDR (NYSE:XLI) is up almost 8% over the last month, but still resides nearly 16% below its 52-week high. Hopes for a second-half rebound by this ETF could largely be determined this week with Boeing, 3M and General Electric (NYSE:GE) reporting.
The risk is that industrials are reporting year-over-year earnings declines and, on a percentage basis, only the consumer discretionary and energy sectors are worse offenders based on that metric.
Photo by Daniel Lu via Wikimedia.