Just as President-elect Joe Biden hopes to do with his inauguration speech on Wednesday, corporate America wants to look ahead, not behind.
The path that led to today’s political and business reality is a rough road indeed. That’s putting it politely. Massive unemployment, a deep recession, presidential subterfuge and an end to 200 years of peaceful transitions of power have marked today’s environment for consumers, companies and investors.
The stock market has not been shaken by the insurrection or impeachment of President Donald Trump. Investor confidence hasn’t been disturbed by the prospects of a one-party legislative and executive branch. Instead, shareholders clearly are optimistic about profit prospects in the coming months. A few of the expectations underwriting that confidence include COVID-19 vaccinations, more federal government stimulus and continued low interest rates.
Investors also anticipate hearing more hopeful outlooks as earnings season picks up its pace in the week ahead. Profits for S&P 500 companies are forecast to have dropped 8.5 percent in the final three months of 2020 compared to a year earlier. It would mark the fourth straight quarter of shrinking bottom lines. If companies turn in better than expected results, as a few have already, it will help improve the valuation picture of stocks even after the enormous rally since March as profits dropped or disappeared because of COVID-19.
The return of some COVID-19 restrictions in Europe and some American cities threatens to ding a first quarter earnings recovery, but nothing like the pandemic-induced freefall from a year ago. And, anyway, investors and companies are looking further down the road.