But the bigger issue is the high bar set by investors’ estimates: The reports are expected to show that the resilient economy increased the earnings of the companies in the S&P 500 by 7.3% during the fourth quarter from a year earlier, according to data compiled by Bloomberg Intelligence.
The US stock market’s strongest two-year rally since the dot-com bubble is heading into its next big test as companies start releasing quarterly earnings, providing a major gut check on whether valuations have outrun the underlying reality.
On Friday, the S&P 500 Index slid 1.5% — its worst drop since mid-December — as an unexpected surge in hiring solidified speculation that the US Federal Reserve won’t cut interest rates again until the second half of the year.
