Wall Street: The season of balance sheets with big banks begins, in a key week due to inflation data

Wall Street: The season of balance sheets with big banks begins, in a key week due to inflation data

Expectations are mixed heading into the start of the second quarter corporate earnings seasonThis week will be marked by the US inflation data to be released on Thursday and the quarterly results of three Wall Street banking giants: Citigroup, JPMorgan and Wells Fargo.

The question remains, however, that the tech giants that drove the stock market to record highs now have the pressure to keep the party going this earnings season. The S&P 500 is up more than 17% this year, fueled by investor enthusiasm about artificial intelligence, which has driven shares of Nvidia and its fellow tech titans to unimaginable heights. Alphabet, Meta and Microsoft are also up, all with double-digit gains.

The growing size of the index’s heavyweights means much depends on their ability to generate earnings and offer guidance in the coming weeks that justify their astronomical valuations.

Optimism has abounded even after last year’s AI-driven rallyThe top 10 companies in the S&P 500 make up 37% of the index’s market capitalization, but contribute 24% of its earnings.the widest gap since the third quarter of 1990, according to data from Torsten Slok, chief economist at Apollo Global Management.

Overall, S&P 500 companies are expected to report a fourth consecutive quarter of earnings growth, with projected returns of 8.8% since the second quarter of last yearaccording to FactSet. That would mark the biggest increase since the first quarter of 2022.

Wall Street: What the market is analyzing

Delta Air Lines, PepsiCo and Conagra will also report results. They will also get new information on inflation with the release of the June consumer price index, which could influence the Federal Reserve’s outlook on interest ratesOn Friday, data indicating a cooling labor market strengthened the argument for a rate cut in September, as reported by Ambit.

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Overall, Wall Street appears optimistic, with analysts expecting S&P 500 earnings to rise 11% by 2024.

Reuters

Overall, Wall Street appears optimistic, with analysts expecting S&P 500 earnings to rise 11% by 2024, according to FactSet. But investors are watching to see whether earnings growth will broaden. Analysts expect the communication services sector, home to companies such as Alphabet and Meta, to report the biggest profit increase among S&P 500 sectors, up 18%..

The health sector is also expected to report a 17% increase.The materials sector is forecast to post the biggest drop in earnings, down 10% from last year. Investors will also focus on what executives say about consumer spending, with initial reports showing signs of a pullback among lower- and middle-income households.

Source: Ambito

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