Earnings Season ‘Kicks Off’ in Earnest This Week

Earnings Season ‘Kicks Off’ in Earnest This Week


FLASH: Traders will focus on the start to Q-2 earnings season this week.

Big banks including JP Morgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and Bank of America (NYSE:BAC), along with Netflix (NASDAQ:NFLX) and Microsoft (NASDAQ:MSFT) report Quarterly results this week, setting the tone for the rest of Q-2 earnings season.

Wall Street is ready for S&P 500 companies to post the worst batch of earnings results in 3 years in the face of ongoing macro-economic concerns. Consensus analysts expect an about 1% Y-Y decline in aggregate EPS for Q-2, due to deteriorating economic indicators including ISM and PMIs, and higher input costs as a result of a strong labor market.

Economic growth is the primary driver of S&P 500 sales and earnings growth.

Recall, that Wall Street analysts were also despondent heading into Q-1 earnings season, but corporations outperformed, and the market rallied to all time highs.

Analysts had expected a 2% decliner Y-Y in Q-1 S&P 500 EPS, similar to what they are now whispering (saying but not writing) in for Q-2, and the actual Q-1 EPS wrapped up with +3% Y-Y growth.

For Q-2, consensus expectations are calling for all 8 S&P 500 sectors to see positive sales growth, but margin contraction. The communication services and financials sectors are forecast to see the fastest pace of EPS growth, at 4% and 3% growth, respectively.

Stay tuned and have a terrific week

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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