Earnings season is underway on Wall Street and, thanks to a heady combination of core business strength and tax windfalls, the results have been exceptional.
In fact, based on the numbers so far, profits among the biggest American corporations are growing so fast that you may expect the stock market to be soaring like a rocket.
That’s not the direction the market has been heading, of course. Since February, most stocks have been sluggish — or downright negative — and the spectacular earnings reports have received less fanfare than they probably deserve.
There are valid reasons for the market’s lack of response, the main one being that by February the market had gotten way ahead of itself, reaching valuations that few people could justify. Stocks rose so rapidly in 2017 and early 2018 — on top of their increases since 2009 — that prices had begun to seem impossibly high.
