"Record Earnings Reports in the U.S. are Cooling Off Investors"

Record Earnings Season

American companies are experiencing one of the most impressive quarterly periods in recent years. However, despite this positive scenario, a significant lack of enthusiasm among investors has been observed. Analysts report that more than 80% of the 446 companies in the S&P 500 index that have announced third-quarter earnings have exceeded analyst expectations. This rate stands out as the highest performance recorded since spring 2021.

Market's Frustrating Responses

However, it is noteworthy that these earnings, which came in above expectations, have not received adequate responses from investors. Since the earnings season was kicked off by strong results from JPMorgan Chase and other major financial institutions, the S&P 500 index has only risen by 1.3%.

Cold Response to Great Quarter Evaluations

Goldman Sachs analysts stated in their report dated October 31 that S&P 500 companies announcing earnings above expectations performed only 0.3% better within the first day of their earnings announcements. This rate is significantly below the historical average of 1%. Experts express that the excessive expectations brought by reaching record levels have influenced this situation.

Impact of Nearly 100% AI Investment Savings

The slowdown in the markets is also stemming from concerns regarding the increasing investments in artificial intelligence in recent days. High expenditures on AI by many technology companies have caused the NASDAQ Composite Index to experience its worst week since April. Rising stock prices since September have led some investors to become skeptical, creating a cautious atmosphere in the market.

Market Recovery May Require a Pullback

With the earnings process still ongoing, results from major names like Walmart and Nvidia are eagerly awaited. As a result, some analysts believe that the current pullback is inevitable for the market to return to solid foundations. Chris Grisanti from MAI Capital Management states, "We generally see stocks rebounding in the last weeks of the year," referring to the continuity of past trends.