The stock market has had trouble picking up much steam so far in 2015, with the Dow Jones Industrials (DJINDICES:^DJI) finishing April up just 17 points from where it began the year. A big part of investors' anxiety about stocks has come from expectations that first-quarter earnings season would go badly, especially in hard-hit sectors such as energy. Yet while the first quarter is shaping up to be the worst for earnings since late 2012, several parts of the economy are helping to offset the drop in energy.
The big winner so far during earnings season has been healthcare, where earnings have climbed nearly 22%, according to figures collected by FactSet Research. That showing almost doubles what investors expected at the beginning of the quarter, with double-digit revenue growth helping to power most of the sector's subcategories forward. Biotechnology stocks have been especially strong, with Gilead Sciences (NASDAQ:GILD) responsible for much of the entire healthcare sector's gains by doubling earnings on a year-over-year basis. Yet even without Gilead's influence, rising sales from healthcare technology stocks and healthcare providers have added to the positive push from biotechnology.
The other standout has been the utilities sector, which has defied early forecasts for earnings declines by posting a roughly 6% rise so far in the quarter. Utility companies' revenue performance has been weak, but utilities have been smart about making capital investments that will allow them to request higher customer rates from regulators. With interest rates still low, it's easy to get funding for these investments, and as long as regulators allow utilities to pass through much of the cost of these capital improvements to customers, profits could continue to rise.
Overall, better than expected results from healthcare, utilities, and several other sectors have wiped out most of the anticipated red ink from energy during the quarter. Based on the latest tally of quarterly results, current projections have earnings from S&P 500 companies falling 0.4% from last year's first quarter. As bad as that sounds, given initial projections for declines of as much as 5%, the earnings season has turned out to be better than expected.
Investors will likely remain concerned about earnings for much of 2015, as market participants expect year-over-year declines in both the second and third quarters. Yet despite these worries, continued strength in areas such as healthcare and finance could help keep markets from giving way for the remainder of the year.