Earnings Growth Finally Turns Positive

 | Oct 21, 2016 05:35AM ET

The Q3 earnings season is on track to be the first quarter to show positive earnings growth after 5 quarters of back-to-back declines. The growth pace is barely in positive territory at this stage, with the aggregate Q3 earnings growth for the S&P 500 index currently at +0.1%. This growth pace will most likely improve further in the coming days, but even this low growth pace is an improvement over what we have become used to seeing in recent reporting cycles.

The chart below shows the evolving Q3 earnings growth for the S&P 500 index contrasted with declines in the preceding 5 quarters and expectations of positive growth in Q4. Please note that the +0.1% earnings growth for Q3 compares to the -2.9% decline expected in earnings at the start of this month.