S&P 500 Profit Beats Draw Worst Stock Price Reaction on Record

Group 1 - About 81% of S&P 500 companies have beaten fourth-quarter profit expectations, but their shares have underperformed the benchmark by an average of 1.1 percentage points, marking the worst relative performance since 2017 [1] - Companies like 3M Co. and State Street Corp. saw significant share price declines despite beating profit estimates, indicating that investors are more focused on future guidance rather than past performance [2] - The current market environment is characterized by high valuations, with the S&P 500 trading at about 22 times forward earnings, above the 10-year average of 19, leading to increased scrutiny on corporate earnings and forecasts [5] Group 2 - Investors are becoming more discerning, particularly in light of geopolitical concerns such as potential trade wars, which have contributed to a selloff in global equity markets [4] - Companies that missed earnings estimates this quarter underperformed the S&P 500 by an average of 3 percentage points on the day of reporting, highlighting the importance of meeting or exceeding expectations [5] - Analysts have been cutting profit estimates ahead of the reporting season, emphasizing the high stakes for corporate earnings as US stocks have reached record highs [3]