Earnings season came to a close Thursday and finished off on a weak note as Wal-Mart (NYSE:WMT) reported what the market considered to be poor earnings. For earnings season as a whole, though, equities saw modestly positive returns with the S&P 500 gaining around 1%. It definitely wasn't a straight line higher over the last six weeks, though, as the S&P was down as much as 3.7% just prior to the election. In fact, were it not for the post-election rally, the current reporting period would have quite possibly been the worst since the Q3 2012 reporting period.
The chart below shows the S&P 500's performance during the four earnings seasons of 2016. Looking at the chart, there has been a shift in the market's reaction to earnings in the second half of the year compared to the first half. In the first half of 2016, the bulk of the gains came in the periods between the Q4 and Q1 reporting periods, while stocks dropped during the actual reporting periods. In the second half of the year, though, we have seen gains during each reporting period, with interim declines during the earnings off-season.