Each Monday, MoneyBeat publishes a short column in the WSJ print edition highlighting a statistic getting traction in the markets. This week's "Big Number" is 78%, the percentage of the bull-market rally that has taken place during earnings season.
The stock market's relentless push higher could be due for a pause.
The S&P 500 has registered five straight weeks of gains and is up 4% during that period, a stretch that has coincided with third-quarter earnings season.
That also corresponds with a trend that has driven the S&P 500's rally this year and the bull market that began in March 2009: The pace of the market's increases has surged during corporate reporting periods and has slowed during so-called earnings off-seasons.
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Since the second quarter of 2009, 78% of the rally has occurred during earnings seasons, according to Jeffrey Kleintop, chief market strategist at LPL Financial. He defines these reporting periods as the two weeks prior to Alcoa Inc.(AA)'s quarterly reports and then the four weeks afterward.
Consider this year's action: The S&P 500 jumped 4.6% and 7.5%, respectively, in the first- and second-quarter earnings seasons, according to Mr. Kleintop's calculations. But in the weeks this year when a bulk of companies weren't reporting results, the stock index fell 1.8% and 0.3%, he says.
Overall, about three-quarters of the S&P 500's increase this year has taken place during earning season.
"Corporate profits are still the lifeblood of the stock market," Mr. Kleintop told MoneyBeat.
Now that the third-quarter reporting period has come to an end, the worry is the recent trend will continue. That means it might be tough for the market to keep rising at such a rapid rate.
"While we expect stocks may continue to provide gains for investors, the pace of those gains is likely to slow and volatility may pick up," Mr. Kleintop says.
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