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2025-10-28 02:00:56
With the US stock market at record highs, American companies face a high bar to deliver results that justify high stock prices, and investors have little patience for companies with disappointing earnings reports. Bank of America data shows that the market is punishing companies that miss earnings expectations more harshly than in the past. Stocks that miss both revenue and net profit expectations underperformed the S&P 500 by an average of 5.5 percentage points the following day, a margin that's more than double the historical average and tied for the second-largest margin on record for the bank. Meanwhile, the margin of outperformance for companies that beat earnings expectations is lower than the historical average. Savita Subramanian, the bank's head of US equity and quantitative strategy, wrote in a note to clients on Monday that this reporting cycle has been "tongue-in-cheek" and that "the market is punishing misses far more harshly than in the past."
