On October 28, 2013, a Wall Street sign is seen outside the New York Stock Exchange in New York. Carlo Allegri/Reuters Reuters, NEW YORK, July 9 – Investors are focusing on upcoming quarterly results from U.S. corporations as well as projections for the rebound in the second half of 2021, as some fear the recent economic surge is already diminishing. On expectations that economic growth may weaken in the second half, US Treasuries rose significantly this week, sending yields to levels not seen since February. Financials, oil, and other so-called value stocks saw a selloff on the stock market as the recovery progressed. The recovery from last year’s pandemic-induced profit fall is likely to reach a nadir in the second quarter, with a significant boost in earnings. According to Refinitiv’s IBES statistics, S&P 500 earnings are expected to have increased 65.8% year over year. According to Refinitiv’s IBES statistics, this is on course to be the highest percentage gain since the fourth quarter of 2009, following the Great Financial Crisis. JPMorgan Chase (JPM.N), Goldman Sachs (GS.N), Bank of America (BAC.N), and other big banks will release earnings reports starting Tuesday, kicking off the quarterly results season. They could provide early indicators of the economy and growth-related stocks. Despite dropping trading income and stagnant revenue due to low interest rates and sluggish demand, most major US banks are likely to post a significant increase in quarterly earnings. find out more Investors are also waiting to see if earnings will continue to support Wall Street’s bullish trend, which has seen the S&P 500 (.SPX) rise approximately 16% so far this year. Many market observers believe the market’s robust performance is due in part to the predicted increase in earnings this year. However, a weaker-than-expected report on jobless claims in the United States this week, as well as the emergence of the Delta coronavirus type, have raised investor concerns about the economy’s reopening. “What investors will want to see this earnings season, and what we expect, is that the value side’s earnings trend remains intact, bolstering (the idea) that it’s too early to exit this play. And it all starts next week with the banks “Truist Advisory Services’ chief market strategist, Keith Lerner, suggested as much. Because of years of underperformance, many investors, including Lerner, have stayed positive on economically sensitive sectors like energy, financials, and industrials, which are considered value bets. find out more
For the week, the S&P 500 value index (.RLV) is down. Over the same time period, the S&P 500 growth index (.RLG) has risen, reflecting a rise in technology stocks aided by a drop in the benchmark 10-year note yields. While the picture isn’t flawless across the board, according to Gary Bradshaw, portfolio manager at Hodges Capital Management in Dallas, Texas, who favors energy, materials, restaurants, and some retailers, the earnings season should validate the economy’s health. “It’s not all roses,” he admitted, “but we would expect exceptionally excellent results, and so we’re bullish about the market.” Industrials, consumer discretionary, energy, and materials are likely to have the largest year-over-year profit increases, with industrials (.SPLRCI) expected to increase by more than 500 percent, according to Refinitiv data. In a report this week, Nicholas Colas, co-founder of DataTrek Research, stated that second-quarter earnings expectations are likely still too low. When a result, forecasts for 2021 and 2022 “should continue to rise as we receive Q2 financial reports,” he wrote, giving investors more confidence that earnings will underpin the market into next year. What corporations are doing to pass on price rises from raw materials will also be on the radar, according to Sameer Samana, senior global market analyst at the Wells Fargo Investment Institute. In recent months, economic data has shown signs of these pressures. Delta Air Lines (DAL.N), UnitedHealth Group (UNH.N), and Kansas City Southern are among the corporations that will report next week. Caroline Valetkevitch contributed reporting; Lewis Krauskopf contributed additional reporting; and Alden Bentley and David Gregorio edited the piece. The Thomson Reuters Trust Principles are our standards./n
