Wall Street expects strong fourth-quarter earnings driven by robust US economy
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Analysts expect fourth-quarter earnings for S&P 500 companies to rise 8.8% on a year-over-year basis, according to data compiled by LSEG. Technology companies are expected to lead the way, fueled by persistent AI strength.
“Solid U.S. economic growth and Federal Reserve rate cuts have boosted corporate earnings and profit margins, lifting U.S. stocks and underpinning our overweight. We think this will keep playing out in Q4 earnings results starting this week,” said strategists at BlackRock Investment Institute.
The earnings gap between the “Magnificent Seven” tech giants and the rest of the market is expected to keep narrowing, they added.
“In recent years tech was a big part of earnings growth but value stocks are supposed to have pretty solid earnings. Industrials, financials and other cyclical value names very well might show improving earnings growth justifying economic growth,” said Ryan Detrick, chief market strategist at Carson Group.
The earnings season officially kicked off on Tuesday, with JPMorgan Chase exceeding analysts’ estimates for fourth-quarter profit.
“We see 9 of the 11 sectors posting positive growth in Q4, up from 6 in Q3, and 2 in Q2,” Deutsche Bank analysts wrote in a note, pointing to a broader profit growth across S&P 500 companies.
On the flip side, sectors catering to cost-sensitive buyers may face renewed strain as value-conscious shoppers tighten their belts, making sectors such as consumer discretionary the biggest laggards of the season, analysts at Deutsche Bank and Citi noted.
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