NEW YORK (Reuters) - pledge of revenues from U.S. companies beat analysts for just-finished fourth-quarter expectations but by translating the good news of strong gains in stocks will be difficult.
Estimates for the fourth quarter for the S & P 500 one sees clearly on the rise but are barely changed since spring despite these recent cheerful economic news - a sign that the company and analysts targets will prove too conservative once more.
Recent optimism has pushed the S & P 500 benchmark index (.)(SPX) up to 10.8% since the end of September. Analysts question whether a low storage bar will be sufficient to keep the stock prices moving higher as reports begin to roll into Monday with the results of the manufacturer of aluminum Alcoa Inc. (AA)(N).
"Simply because they are good does average market or stocks will rise." If a stock had a nice run, you could see a small profit-taking on the news, "said Robert Auer, Manager main portfolio fund SBAuer in Indianapolis."
In the fourth quarter earnings for the S & P 500 companies are expected to increase by 32 per cent last year, according to data from Thomson Reuters. In April, the forecast for the fourth quarter was for an increase of 31.5%.
Similarly, Brown Brothers Harriman growth projects gain 34% for the quarter, but "factoring in the underestimation of the analyst" it bumps up its 41% to 42% growth forecast.
"Normally high Beats get analysts to bump their subsequent quarters and that stopped happening in may," said Charles Blood, senior at Brown Brothers Harriman market strategist. The absence of adjustment for playful economic news "is another reason to believe that the estimates are too low."
Approximately 72% of companies S & P 500 has beaten profit estimates in the third quarter, well above the 62 percent in a typical neighbourhood, Thomson Reuters data has shown. Beats percentage was above average in recent quarters.
The U.S. economy grew at a percentage of 2.6 annualized pace in the third quarter, and analysts expect a gross domestic product to extend to a 3-3.5% pace in the last three months of the year.
BANKS, LIKELY OUTPERFORMERS ENERGY
Some analyses suggest a small number of major stocks have the potential to move the market. Banking and energy sectors to find market beats moving, according to an analysis of data from Thomson Reuters StarMine by Michael Tarsala, quantitative analyst for Reuters. StarMine weight forecasts according to analyst accuracy.
For Reuters Insider earnings report, see http://link.reuters.com/ted25r
Two stocks in particular - ConocoPhillips (COP.)(N) and Bank of America Corp. (BAC).(N) - could move the entire market due to their size and expected results, said Tarsala.
Financials and energy were strong performers of late, with the S & P financial Index (.)(GSPF) up to 13 percent since the end of September. The energy sector (.)(PSE) is 21.5% over this period.
The analysis shows of the 50 companies in the S & P 500 who could beat estimates of earnings by 2% or more, according to StarMine.
Business investment based on the T3 Denver Equity Labs provides the S & P telecommunications sector has the highest probability of a head surprising gains among 10 sectors of the S & P, based on his own research model.
Founder Mike Jackson said telecom jumped to the No. 1 to no. 3 spot recently in its list of sector and "has a chance of improving quickly" surprises.
Energy is classified in the second place, he says, but he noted that he fell into the No. 1 ranking recently.
With telecoms, "frontal factors that I significantly improves... feeling is improving, but is not reported in this way," he said.
Among the other big names who could see gains debate: Boeing Co (BA).(N), StarMine forecasts will be 2.9% above Thomson Reuters consensus estimates. and Dow Chemical (DOW) Co(N), 4.1% above consensus forecasts of StarMine.
StarMine forecasts Alcoa are only 0.4% above consensus, the data showed.
(Reporting by Caroline Valetkevitch; editing by Jeffrey Benkoe)
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