Earnings reporting season for the first quarter is just about over with. As of Monday, May 22, over 95 percent of the companies in the S&P 500 have reported their results for Q1.

At the end of the quarter on March 31, the estimated earnings growth rate for the S&P was at 9 percent and today with less than 5 percent of the companies yet to report, the actual rate of growth has been 13.9 percent. This is the highest year-over-year earnings growth since 2011.

According to data from FactSet, 75 percent of reporting companies have beaten their earnings estimate for the first quarter. The current price to earnings ratio (PE) for the S&P 500 is 17.3, which is higher than both the five and ten year averages.

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Ten of the 11 sectors have reported earnings growth this quarter. Telecom Services is the only sector that posted a drop in earnings.

The Energy sector was the largest contributor to earnings growth for the quarter, but an earnings growth rate was not calculated because they had a loss in the first quarter of 2016.

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The Financials sector reported the best earnings growth rate of all the sectors at 19.9 percent. Bank of America was the largest contributor to the rate of growth at the company level.

Materials were the next best sector with a growth rate of 17.8 percent and were led by the Metals and Mining industry, with a whopping 792 percent growth rate.

The next best sector was Information Technology, which had fairly balanced growth across all industries and was led by Semiconductors. Micron Technology was the best performing company.

Out of the 11 S&P 500 sectors, Telecom Services was the only one that had a decline and their earnings dropped by 5 percent.

Earnings growth is forecast to continue throughout 2017. The projected earnings growth of the entire year is forecast to come in at almost 10 percent. The major indexes have all hit record highs recently and the market’s valuation is above average. The political situation will continue to have an impact on the markets as some significant changes in tax and economic policy are anticipated.

The Federal Reserve will have another meeting next month and more interest rate increases are expected this year. Good economic and earnings growth will be needed if this stock market rally is going to continue.

Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at http://www.sellacalloption.com or 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand the risks and/or how the purchase or sale of these investments may be implemented to meet your investment goals. Past performance is no guarantee of future results.