Markets are constantly in a state of sector rotation, always trying to anticipate the next rising trend of business momentum and this past week is no different.
Every earnings season has a way of re-defining the current market leadership by either reaffirming its confidence in those sectors that led going into earnings season or by rapidly rotating into sectors where unexpectedly good business conditions weren‚??t priced into the underlying stocks. As to the current earnings season, you just don‚??t know how the Street is going to react to a stock when a company‚??s results cross the tape.
A good example of this unpredictability occurred when the big banks kicked off the first-quarter reporting period, and all reported top- and bottom-line results that beat estimates, but their share prices still fell. Whether investors had priced in great earnings or fear arose that an inverted yield curve could pinch margins, no one knows, but the stocks clearly have underperformed on what was seemingly excellent news.