Bad 1st Quarter GDP – yet stocks don’t care

The S&P 500 and the Dow are below the early March high. But the Nasdaq Composite) is much higher than it was in March. It is astonishing how high the Nasdaq has moved and how stable the Dow and S&P are considering the very weak 0.9% GDP report for the first quarter.

My overall graph of cyclicals divided by consumer staples shows the cyclicals well ahead over the last couple of weeks. My sector table shows both the Cyclical and Technology groups much stronger than the Consumer Staples and Finance groups. For quite a few weeks I have been examining the most bullish sectors for their fundamentals and have found them hollow; bad earnings and weak sales doesn’t prevent these stocks to rise. Here are the last-quarter’s earnings and sales results for the Retail Sector. It gained a high 3.5% during April.

Symbol Earnings Sales
GES -28% 3%
SYY 6% 11%
TJX 4% 6%
COST -6% 6%
M -3% -4%
KR -7% 6%
CVS 12% 12%
MCD 18% -4%
SBUX 15% 6%
SPLS -4% -3%
TGT -5% -4%
WMT -13% -1%
BBY 27% -1%
LOW 46% 19%
EBAY 4% 4%
DG 15% 14%
JCP 64% -1%

The average earnings was only 8.5% and the average sales only 4.2. But there were 7 of these 17 rows that had negative earnings in the most-recent quarter.

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