Performance check
Wall Street is decked out for its quarterly festival of earnings. Companies are ready with their commentary, analysts are prepared with their projections, and investors are eager to place new bets on the markets. With the S&P 500 and Dow posting new record highs on Monday, the market sentiment looks entirely positive.
Contenders this week: About 40 S&P 500 companies are going to report their third-quarter performance to investors over the next couple of days, which includes Goldman Sachs (GS), Bank of America (BAC), UnitedHealth Group (UNH), Walgreens Boots Alliance (WBA), Taiwan Semiconductor Manufacturing (TSM), Netflix (NFLX), and Procter & Gamble (PG). That gives investors a plethora of data points to assess the health of the U.S. economy as Wall Street awaits the November elections. For the S&P 500 as a whole, EPS growth is expected at 5% in Q3 ’24, on 4.7% revenue growth.
Bull run: Wall Street’s bull market has entered its third year, climbing a total of 62.5% over a total of 502 trading days. The S&P 500 (SP500) bottomed out at 3,577 on October 12, 2022, and has since rallied to the top. Factors boosting this run include the advent of artificial intelligence and a Federal Reserve that looks to be on track to deliver a soft landing. Among the bunch, the Magnificent 7 have done most of the heavy lifting in the bull run.
Bar too low? With quarterly earnings seeming to be off to a good start, Christine Short notes in a third-quarter results preview that sell-side analysts have ratcheted down their estimates more than usual this earnings season. Since June 30, Q3 earnings estimates have come down by 3.6 percentage points, more than the 3.3 percentage points that have been seen on average over the last 10 years. While expectations have tempered since earlier in the year, the corporate sector remains strong, with ample buffers given elevated profit margins and strong balance sheets, counters Principal Financial Group in Earnings Season: Starting From A Place Of Resilience.