It’s Just About Earnings Season, And Things Don’t Look So Hot

It’s Just About Earnings Season, And Things Don’t Look So Hot
Daniel Johnston

5 months ago2 mins

What’s going on here?

The stage is set for US companies to roll out their second-quarter earnings updates – and it could be a minor burnout.

What does this mean?

Earnings season is just around the corner, with the big US banks set to kick things off in earnest next week. But analysts are already playing the guessing game. Data from FactSet suggests they’re bracing for a bit of a drop: they reckon S&P 500 firms might see an overall 6.5% earnings dip compared to last year – the biggest slump since mid-2020. But it’s not a total sob story. While dropping commodity prices and a shaky economy have got the energy and materials sectors bracing for a serious fall, seven out of the eleven sectors are still predicted to climb, with consumer discretionary and communication industries tipped to lead the pack.

Earnings expectations

Why should I care?

For markets: Eye on the prize.

Earnings season can make or break the stock market’s mood. But it’s not just the actual figures that matter: it’s about meeting or beating expectations, which are already priced into stocks. Plus, it’s companies’ outlooks that could be the real headliners here – remember, investors are more interested in the future than the past. And despite whispers of an earnings dip, analysts are still feeling bullish: the percentage of buy ratings among the S&P 500 companies is above the five-year average right now.

The bigger picture: Peaking market or piquing interest.

The tech sector grabs headlines because it’s a big player, accounting for about a quarter of the S&P 500. But it’s been getting even more attention lately thanks to the AI buzz, which helped tech kick off the year on a high note. And sure, not everyone’s buying into the hype, but some analysts think this is just the warm-up act: they’re predicting that an AI-driven tech bull market is now ready to take center stage.

AI stocks
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