US companies are partying like it’s 2021

Corporate America just reported the biggest jump in profits since late 2021, adding a helpful bit of ballast to a market that just a week ago was getting whipped around by concerns about the economy, the Fed, and the unwind of popular trades.

The month-long spate of earnings reports is more or less coming to a close, with Walmart’s stellar Q2 numbers out this morning. (Sure, there’s a few fairly significant stragglers left — such as Target and Nvidia next week.)

But with results in for more than 450 of the members of S&P 500, the cake has essentially been cooked and it turned out to be quite tasty.

Quarterly earnings per share — using an estimate of actual reported results and estimates for the few companies outstanding — were up over 11% year-on-year. (That’s better than the 9% gain that Wall Street was expecting just before earnings season began.)

Revenues are on track to rise more than 5.3%, the biggest gain since late 2022. And analysts, having failed to find anything particularly worrisome in the entrails of the reports, are steadily revising expectations for earnings over the next 12 months higher, though not dramatically so.

The earnings news, coupled with recently rosy reports on inflation, and some jolly economy updates recently, have all combined to help the stock market more than get its mojo back. The S&P 500 is up more than 3.5% this week, helping it regain all the losses it suffered since that weak July jobs report provoked a mini-panic at the start of the month.