Earnings beats are holding less weight in the current environment. Despite 79% of the S&P 500 reporting positive EPS surprises, above both the 1-year (73%) and 5-year averages (77%), stock price reactions for those surpassing analyst estimates have been negative -0.5%, on average.

Smaller-cap companies received more attention recently from investors, but outperformance in the stock market still largely revolves around the biggest names YTD. Market breadth did improve during July, when the Russell 2000 outperformed the S&P 500 by 3% on renewed confidence that a hard economic landing might be averted. However, August has reversed that outperformance to the point where the S&P 500 and Russell 2000 indices are now neck-in-neck since the beginning of July.

Companies with greater international exposure have produced sub-par results when compared to their domestically focused counterparts. In particular, those with more China exposure have fundamentally performed worse than the rest of the group, with price reactions serving as a poignant indicator as of late.