The US earnings season cranks up in the coming week with over 400 companies of all sizes due to report, including 118 S&P companies who will be releasing details of their third quarter earnings. Included in that number will be giants from banking such as Morgan Stanley, technology, Microsoft and Yahoo! and manufacturing, Boeing, 3M and Caterpillar.
Banks dominated last week with the reports from Citi, Goldman Sachs, Well Fargo and Bank of America all showing weak revenue growth (or big falls), tight cost controls, and lower earnings than a year ago, but within market estimates.
But the headline update came from the world’s biggest retailer, Wal-Mart Stores which cut its sales forecasts for this year and next and its ratings outlook as well. the result, a 12% slide in the market price over the week and in fact that biggest weekly fall since 2008 and the depths of the GFC.
Wal-Mart’s reasons for the downgrades said much about the state of the US economy and its outlook – weak consumer demand and spending, rising competition among bricks and mortar retailers as well as online (with Amazon leading the way), the need to pay staff more and the rising cost of remaining competitive in the face of this competition with several billion dollars to be invested in price cuts.
On top of that the stronger US dollar is making a mess of sales and earnings from Wal-Mart’s generally solid businesses in Mexico, Britain, Asia and Mexico. These will all be factors investors are looking for in the flood of earnings report to come from this week onwards.
The only factor not present directly in Wal-Mart’s report was the downturn in the oil and gas sector – but the retailer is feeling that from reduce spending in Texas and through the US oil and gas belt.
General Electric, the big US industrial managed to shake off the impact of the slide in oil and gas spending, and the stronger US dollar on its operations to report higher 3rd quarter earnings on Friday night, thanks mainly to a solid performance by its industrial, aviation, transport and transport divisions.
Among the companies reporting this week will be Morgan Stanley, IBM, Lockheed Martin, Verizon, Yahoo!, Caterpillar, United Technologies, Texas Instruments, CoreLogic, eBay, American Express, Baker Hughes, Boeing, General Motors, Coca-Cola, Amazon, AT&T, E*TRADE, Microsoft, ResMed, NASDAQ, 3M, Caterpillar, Eli Lilly, McDonald’s, Chipotle, American Airlines, Eli Lilly, Abbott Labs, 3M Co, Alphabet (the old Google), Southwest Airlines, Dow Chemicals, Thomson Reuters, Whirlpool, Tenneco, and Procter & Gamble.
There are also a host of companies outside the US reporting from Europe, Asia (especially Japan and China) and the UK. They include the Agricultural bank of China, Atlas Copco, Telesonera, Nomura, Electrolux, Sandvik, Stora Enso, LM Ericsson, Volvo, Daimler, Kia, companies in the lG and Samsung groups, Teck Resources, Abb, Credit Suisse and Posco.
