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LivestreamMenuThe corporate earnings season really got underway this week, with all the big banks reporting better-than-expected results across the board. JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley all posted second-quarter figures that beat analyst expectations. Citigroup even reported its best quarterly revenue in a decade. Investors’ reactions to the reports were uneven, however. Goldman Sachs rose sharply following its release, while JPMorgan Chase and Bank of America also advanced Tuesday . Citigroup and Wells Fargo , however, shed 5.3% and 2.7%, respectively after their releases. Morgan Stanley also pulled back more than 1% on Wednesday. Away from the banks, IBM released preliminary Q2 figures that missed Street estimates, leading the tech giant to its worst one-day decline ever. This illustrates a tough reality for companies and investors: While the market has scaled new heights, the bar set for corporations has risen as well. “Analysts raised earnings estimates during the second quarter, a rare occurrence that reflects growing confidence,” wrote Scott Wren, senior global market strategist at Wells Fargo Investment Institute. “But the big question during this earnings season is whether or not companies can outperform very high expectations.” Heading into the reporting period, analysts on average expected S & P 500 earnings expanded by almost 24% in the second quarter from the year-earlier period, FactSet data shows. If that’s the case, it will mark the second straight quarter of year-over-year earnings growth faster than than 20%. Analysts also lifted their second-quarter earnings expectations from the 18.8% they was estimated when the quarter began. “While strong earnings growth usually is a positive for equity prices, elevated expectations can create a tough backdrop for individual companies and the S & P 500 Index as a whole,” Wren wrote. “In this reporting season, we view the market as increasingly focused not only on whether companies exceed consensus estimates but on whether they can also beat the higher, unofficial ‘whisper numbers’ that largely circulate among institutional investors.” Much of the earnings expansion is expected to have been led by tech. Barclays strategist Emmanuel Cau said earnings excluding tech and energy are forecast to have grown just 5% year over year. “Tech/Semis’ earnings will be in particular focus, with investors looking for reassurance on the AI capex outlook, as well as signs of a profitability boost for the AI spenders,” Cau said. UnitedHealth and Netflix are among the companies set to report Thursday. Later this month, Apple and Microsoft , two of the five largest stocks in the nation, will post their quarterly figures.Read More
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