S&P 500 expected to deliver modest earnings growth in Q3

Earnings growth across the S&P 500 is expected to be modest for Q3, with analysts revising EPS expectations throughout the quarter. According to the latest FactSet data, EPS is tipped to grow by 4.2%, down from 7.8% at the end of Q2 and lower than the 11.2% delivered during that quarter.

Information technology, health care and communication services, many of which have benefited from the artificial intelligence boom, are tipped to drive earnings growth for the period, with IT forecast to deliver 15% EPS growth year-over-year. Cyclical sectors are forecast to underperform, especially commodity sensitive materials and energy stocks – the latter is tipped to see a nearly 21% contraction in earnings growth.

The financial sector will be in focus this week, with a series of America’s largest banks handing down results. As a whole, the sector is tipped to reveal practically flat earnings growth. Market participants will peruse the results of the banks for clues about economic growth, credit demand, financial markets activity and financial stress amongst businesses and households.

_{Source: FactSet}

Key companies to watch in the week ahead

1. Friday, October 11
   • JP Morgan Chase & Co. (JPM), Est. EPS $4.02
   • Wells Fargo & Company (WFC), Est. EPS $1.27
2. Tuesday, October 15
   • UnitedHealth Group (UNH), Est. EPS $7.02
   • Johnson & Johnson (JNJ), Est. EPS $2.19
   • Bank of America Corporation, Est. EPS $0.78
   • Goldman Sachs Group, Inc (GS), Est. EPS $6.96
   • Citigroup (C), Est. EPS $1.36
3. Thursday, October 17
   • Taiwan Semiconductor Manufacturing Company (TSM), Est. EPS $1.74
   • Netflix, Inc. (NFLX), Est. EPS $5.07
   • Morgan Stanley (MS), Est. EPS $1.25

S&P 500 extends bull-run to fresh record highs

The S&P 500 continues to press to new record highs off the back of interest rate cuts and data pointing to resilient demand in the economy. Given expectations for lukewarm earnings, the markets will be searching for clues about whether companies expect robust economic fundamentals to feed through to corporate profits.

From a technical standpoint, new record highs clearly point to a bullish market. Having pushed through technical resistance at previous record highs around 5770, the market is probing clear-air, with some possible resistance at an upward sloping trendline. Meanwhile, support could be found around previous resistance at 5770 and a confluence of levels around 5670.

_{Source: Trading View}

Past performance is not a reliable indicator of future results

References

• https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_100424.pdf
• https://www.nasdaq.com/market-activity/earnings

Related topics

#S&P 500 (US500) #Economics #Economic news

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