This week brings a transition from a market dominated by speculation about the pace of interest rate cuts by the Federal Reserve to worries about earnings and the growth rate for corporate profits.
Don’t worry we’ll still see plenty of economic news with the potential to move financial markets. For example, on Wednesday, the Federal Reserve will release minutes from its September meeting. Markets could react to comments that suggest how the Fed is thinking absit its next move on interest rates. On Thursday in latest inflation numbers, September Consumer Price Index (CPI), are expected to show a continuing decline in inflation
But by the end of the week I expect attention to shift from economic news to the release of third quarter earnings reports. On Friday, JPMorgan Chase (JPM) kicks off reporting season. Analysts expect the big bank to report earnings of $4.04 a share. That would be a significant drop from the $4.33 reported for the third quarter of 2023.
That year over year drop in earnings is just one data point in what is shaping up as a challenging quarter for earnings. Analysts have cut their expectations for third-quarter results in the last few months. They now expect companies in the S&P 500 to report a 4.7% increase in quarterly earnings from a year ago, according to Bloomberg. That’s down from projections of a 7.9% increase on July 12, and it would represent the smallest increase in four quarters.
Which is not exactly positive news for stocks trading near record highs.
