Earnings Price Reaction vs. Surprise

• With earnings season just about finished we can see how some of the sectors performed throughout this third quarter in which various threats have continued to be persistent: economic slowdown, tightening monetary policy, and geopolitical risk. All these and more have created a challenging environment in which companies have begun having trouble navigating.

• Consumer Staples has been a sector in which companies have surprisingly been able to maintain solid margins amid a strong consumer, this in the face of the highest inflation since the 1970s.

• Energy has also been a strong sector this last quarter with Exxon bringing in $20 Billion in profits, nearly matching Apple. With the ongoing global energy crisis this sector has still proven to be resilient amid a slowing global economy.

• Technology had a rough quarter with many of the big mega-cap stocks having strong declines after reporting earnings, with many tech companies reducing staff or instituting hiring freezes. Given their sensitivity to rising rates, tech still faces an uphill challenge going into a high interest rate environment.