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Thus far, with one-third of all S&P 500 companies having reported, third quarter earnings are 28% above year ago levels. In addition, revenue growth is also above expectations as companies continue to benefit from strong demand from emerging economies, a weakening dollar and moderate demand here in the United States. This in turn, has provided support for stocks.
On another note, Bill Gross, Managing Director of PIMCO in his monthly “Investment Outlook” observes that this second round of Quantitative Easing “will likely signify the end of a great 30-year bull market in bonds and the necessity for bond managers and, yes, equity managers to adjust to a new environment.” Time will tell.