The market expected good results from the Q3 earnings season, but actual results came in even better than expected, with a record proportion of companies beating EPS and revenue estimates.

For the 464 S&P 500 companies or 92.8% of the index’s total membership that have reported quarterly results through Monday November 16^th, 84.5% beat EPS estimates and a record 75.6% beat revenue estimates. This is significantly above the levels we have been seeing in recent years.

Total earnings for these 464 index members that have reported already are down -9% on -2.1% lower revenues. Looking at the quarter as a whole, Q3 earnings are expected to be down -8.5% on -1.3% lower revenues.

Tech sector results have been particularly strong, which reconfirm the group’s strong earnings power. All the major players in the space like Apple (AAPL Quick QuoteAAPL - Free Report) , Microsoft (MSFT Quick QuoteMSFT - Free Report) , Alphabet (GOOGL Quick QuoteGOOGL - Free Report) , Amazon (AMZN Quick QuoteAMZN - Free Report) and others reported impressive growth numbers that go on to show that these stocks’ leadership position reflects fundamental strength.

Unlike in the past when estimates for the current period would start going down as companies would report results for the completed, we are seeing estimates for 2020 Q4 go up. We saw a similar trend at play in Q3 as well.

This is a bright spot on the overall Covid impacted corporate earnings horizon, though downside risks remain. Rising infection rates across the country and Congress’ inability to renew the relief measures that expired in the Summer remain notable risks to the outlook. That said, the trend is expected to remain positive, though the growth pace may moderate as a result of these headwinds.