Guidance Gets Better As Earnings Season Enters the 9th Inning

Last week at this time, the spread this earnings season between the percentage of companies raising guidance minus the percentage of companies lowering guidance was at -3.3 percentage points.  The week before that, the spread was at -4.2 percentage points.  As shown below, the spread has increased to -2.6 this week, meaning more companies raised guidance than lowered over the last five trading days. 

Earnings season ends on Tuesday with Wal-Mart's report, so it's highly unlikely that the reading will turn positive by then, but at least guidance has gotten better as earnings season has progressed. 

Below is a chart showing the guidance spreads this earnings season for the ten major sectors.  As shown, just one sector -- Industrials -- has seen more companies raise guidance than lower guidance.  Technology and Telecom are the only two other sectors that have a spread that is better than the -2.6 reading for the entire market. 

For whatever reason, stocks in the two consumer sectors have been lowering guidance much more often than they have been raising guidance this season.  The Consumer Staples sector has had the worst guidance spread at -8.47 percentage points.  Consumer Discretionary has been the second worst sector at -6.38.

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