S&P 500 Earnings Season to Kick off This Week
July 11 2023 - 5:49AM
Finscreener.org
After a stellar first six months
for equity investors in 2023, expect stock markets to turn volatile
this month as earnings season will kick off shortly.
This week marks the beginning of
the earnings season, with a host of leading banks and financial
institutions, including JPMorgan Chase
(NYSE:
JPM),
Wells Fargo (NYSE:
WFC),
Citigroup (NYSE: C),
and BlackRock (NYSE: BLK),
set to release their reports. The subsequent week will feature
reports from Bank of America (NYSE:
BAC),
Morgan Stanley (NYSE: MS),
and Goldman Sachs (NYSE:
GS).
Additionally, we can anticipate
earnings announcements from other industry bigwigs such as
UnitedHealth Group (NYSE:
UNH), Delta Air Lines
(NYSE:
DAL), and
Pepsi (NASDAQ: PEP) in the next five days.
According to research from
FactSet, S&P 500 companiesU+02019 earnings are estimated to
have dropped by 6.8% in Q2. It represents the most severe dip since
the advent of the COVID-19 pandemic and appears bleaker than
predictions from a few months back when analysts forecasted a 4.7%
drop towards the end of March.
Breaking down the company guidance, 67 have
issued negative predictions, while 46 have come out with positive
forecasts.
June inflation report and interest rate
hikes
On Wednesday, the spotlight will
be on the latest inflation data with the unveiling of the June
Consumer Price Index. Expectations point to a 0.3% rise in consumer
prices for the past month. On an annual basis, theyU+02019ve
increased by 3.6%, down from 4% in May.
Core prices, sidestepping the
fluctuations of food and energy costs, are expected to have climbed
0.4% since May and 5.2% from the same period a year ago.
On Thursday, attention will shift
to the Producer Price Index (PPI), offering a glimpse into
inflation from the perspective of manufacturers and wholesalers.
Estimates suggest producer prices ascended 0.2% last month,
following a 0.3% dip in May.
It likely reflects a modest 0.2%
uptick from last year, representing the slightest annual gain since
September 2020 and contrasting starkly with the peak of 11.7%
observed in March of the previous year.
Will Treasury yields increase this month?
Investors are closely monitoring
the 10-year Treasury yield as it climbed on Monday. At the same
time, they keenly anticipate upcoming statements from U.S. Federal
Reserve officials and pivotal inflation data slated for release
this week.
The benchmark yield saw an uptick
of over two basis points, registering at 4.07%. On the flip side,
the 2-year Treasury yield took a slight step back by approximately
one basis point, hovering around 4.923%. As the rule goes, yields
and prices display an inverse correlation, and a single basis point
represents 0.01%.
This week brings numerous Fed
speakers to the stage, whose discussions will be carefully parsed
by investors for any new hints about the future trajectory of
interest rates. The line-up for Monday includes Cleveland Fed
President Loretta Mester and San Francisco Fed President Mary Daly,
who are both likely to address the current economic and monetary
policy landscape.
Despite a marginally softer than
projected growth in non-farm payrolls in last weekU+02019s June
jobs report from the Labor Department, the central bank is widely
anticipated to implement another rate hike in its upcoming meeting
this month. The report also highlighted a stronger-than-predicted
annual wage growth of 4.4%.
While the Fed maintained a steady
course with interest rates in their latest meeting, signs from
policymakers suggest a need for additional rate hikes to edge
inflation closer to their 2% target band. This indicates that we
could see several more rate boosts during the remaining four
meetings scheduled for this year.
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