The US June quarter corporate earnings season gets underway in earnest this week with America’s major banks set to kick off the reporting.
As of Friday, the US financial data group, FactSet estimated that companies in the S&P 500 are expected to report a decline in earnings of 3.4% for the second quarter.
Starting today and going through to Thursday, major banks such as Citigroup, JPMorgan Chase, Goldman Sachs, Bank of America, Morgan Stanley, Wells Fargo, US Bancorp and Bank of New York Mellon.
As well some mega techs are due to report, led by IBM, Netflix, Microsoft and Texas Instruments, Alcoa and steelmaker, Nucor.
Major industrials due to report include Danaher, Textron, and Honeywell, Johnson & Johnson (which is facing growing pressure and a government investigation of its baby powder products)
Other companies down to report include Amex Blackrock, Blackstone, United Airlines, Microsoft, Paypal, eBay, Interpublic, JB Hunt, Monster and Schlumberger, the huge oil services group.
By the time these companies (especially the banks and the financials, Microsoft and other techs and the manufacturers) we should have a good idea of how the US reporting season is going to end up and the strength of results.
Analysts reckon the S&P 500 looks set to suffer its first earnings recession in three years, led by year-over-year declines in the materials and technology sectors. And early signs suggest the recession could continue for a third quarter.
FactSet says its blended year-over-year growth estimate for earnings per share for the S&P 500 (which represents already reported results and the average analyst estimates of coming results), is a negative 3.34% as of Friday, with six of 11 market sectors estimated to post declines.
Actual reports, however, have been much worse. With 24 of the 505 S&P 500 companies or 4.75%, having already reported results, actual reported EPS is down 11.23% from a year ago.
The negative outlook comes after a 0.29% fall in EPS in the first quarter. An earnings “recession” is often defined as two straight quarters of declines. Marketwatch.com says the last time the S&P 500 suffered an earnings recession was the second quarter of 2016 when earnings declined for four straight quarters.
