Earnings season could make or break the market

George Seay, Founder And Chairman, Annandale Capital, explains why second quarter earnings season could be pivotal for the stock market.

Transcript

00:00I also want to ask you about earnings season, because that's kicking off.

00:04What are you expecting, and could that be a positive or negative catalyst for the market, do you think?

00:09It definitely could be a positive catalyst for the market if earnings outperform to a degree the market wants.

00:15Usually, earnings expectations are exceeded about 70% of the time in reported earnings.

00:20Companies obviously lowball and try to have the market outperform what the market's formal expectations are,

00:28but they've got to outperform by enough for the stock to continue to go up,

00:31because the stocks have already gone up in anticipation of that.

00:34So I think earnings season will have a very dramatic impact on whether we have a very soggy fall

00:39or if the market continues to march up into the right.

00:41I saw one firm came out today with a new price target by end of the year for the market of 7,000 on the S&P 500 index,

00:49which would be another 12% up from even where it's been this year,

00:52which would give us three straight years of 20% returns to the market.

00:56I don't find that super likely, but there's still quite a bit of optimism out there,

01:00even though the market's rallied as much as it has.

01:02So I think this earnings season is going to be very important throughout the rest of the year.