Why the end of the earnings recession doesn’t guarantee stock market gains

The corporate earnings recession is officially over, but Wall Street’s celebration may be a bit premature. Although earnings are better than a year ago, they are likely not strong enough to support the stock market’s recent gains.

With over 98% of the S&P 500 companies reporting results for the fourth quarter, overall earnings per share are on track to rise 4.7% from the same period a year ago, on the heels of 2.9% growth in the third-quarter, according to FactSet.

The two straight quarters of EPS growth effectively end a recession that started in the third quarter of 2015, after back-to-back quarterly EPS declines.

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