Julius Caesar was warned by a soothsayer that harm would come to him no later than the Ides of March, which in ancient Rome equaled March 15. The Roman dictator scoffed, but that was the exact day on which he was assassinated in the Senate by a gang of conspirators in 44 BC. The phrase “Beware the Ides of March” was coined by Shakespeare in his play Julius Caesar.

The Ides of March is fast approaching on the calendar. Some analysts foresee imminent harm to the stock market. Is the current rally an assassination target? It’s a matter of history: bull markets are often killed at the hands of rising interest rates.

That said, I think the rally has further to run. Rates are rising but they’re still historically low. Other fundamentals, such as corporate earnings growth, are rapidly improving. Valuations are high, yes, but they’re not seriously out of line with projected earnings growth.

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Sure enough, the Dow Jones Industrial Average soared Monday by 306.14 points (+0.97%), to close at a record high. The betting now is on beaten-down cyclical stocks that benefit from economic reopening. The S&P 500 slipped 20.59 points (-0.54%), and the technology-heavy NASDAQ dropped 310.99 points (-2.41%), as momentum stocks lost ground amid the rotation toward value. In pre-market futures contracts Tuesday, all three indices were trading sharply higher.

A major positive for equities is the return to corporate earnings growth. For fourth-quarter 2020, with nearly 100% of S&P 500 companies reporting actual results, the earnings per share (EPS) growth rate was 3.9%, the first quarter of year-over-year earnings growth since Q4 2019, according to research firm FactSet.

Among S&P 500 companies in Q4 2020, 79% reported a positive EPS surprise. That’s the third-highest percentage of companies reporting a positive EPS surprise since FactSet began tracking this metric in 2008. (FactSet is the data provider for Investing Daily.)

The news gets better. For Q1 2021, the estimated EPS growth rate (as of this writing) for the S&P 500 is 21.8%. If that percentage materializes as the actual growth rate for the quarter, it will mark the highest year-over-year quarterly earnings growth reported by the S&P 500 since Q3 2018 (26.1%).

Wall Street is growing more confident. The estimated Q1 2021 EPS growth rate for the S&P 500 on December 31 was only 15.7%. The energy and financial sectors have led the increase in upward revisions. For calendar year 2021, the consensus estimate calls for EPS growth of 24.2%.

The prevailing winds…

The change in policies under the new regime of President Biden is influencing conversations among corporate managers. The White House is implementing initiatives that are aligned with Democratic party priorities. The pragmatists in the C-Suite are trimming their sails accordingly.

Corporate leaders are increasingly embracing environmental, social and governance (ESG) factors. In a new survey released last week, FactSet searched for the term “ESG” in the Q4 conference call transcripts of all S&P 500 companies that conducted earnings calls from December 14 through March 5, 2021.

Among these companies, 129 cited ESG during their calls, a 63.2% increase compared to the number of companies citing the term in the previous quarter (see chart).

All 11 S&P 500 sectors reflected an increase in the number of companies citing ESG on a quarter-over-quarter basis. Among these companies in the survey, 154 cited “Biden” or “administration” (in reference to the Biden administration) on earnings calls for Q4 2020. Elections have consequences.

ESG factors are gaining prominence in the strategic decisions of Wall Street and corporations. Not because financial and corporate leaders have suddenly become “bleeding hearts,” but because ESG is good for the bottom line.

Equity strategists at Bank of America (NYSE: BAC) recently analyzed thousands of publicly listed companies based on their ESG practices. In their global report ESG from A to Z, they found that companies scoring highly for ESG practices generally performed better in terms of operating results and share prices than those in their sectors that scored poorly.

In terms of ESG, the Biden administration’s emphasis on renewable energy is a boon for commodities. Green technologies (e.g., electric cars and solar power) are voracious consumers of various raw materials. These inputs also happen to be in short supply. New construction projects around the world, especially in rebounding China, also fuel this demand. For a commodities play that belongs in any portfolio, click here now.

John Persinos is the editorial director of Investing Daily. You can reach John at: mailbag@investingdaily.com. To subscribe to his video channel, follow this link.