[ad_1]
Now, some analysts believe that profits may not fall at all in the first quarter, a welcome change from the catastrophic scenarios investors once feared. The profits of the S & P 500 index have not declined from one year to the next since the middle of 2016.
According to Credit Suisse, Wall Street analysts forecast a 2.5% drop in earnings per share early in the first quarter earnings season. Friday morning, this estimate had climbed from little to positive territory.
With earnings above expectations (analysts are generally setting the bar low), S & P 500 earnings are expected to increase by 2.5% to 3% by the end of the earnings season, according to Credit Suisse.
This is not a fluke. The earnings season is already well advanced: the S & P 500 companies that have already announced a profit represent half the value of the index. The results have impressed so far.
According to Credit Suisse, nearly 80% of companies reported final results above Wall Street's expectations, above the three-year average of 71%.
Wall Street is not yet short of income, though.
Meeting expectations is not enough to please shareholders these days.
Companies that beat their earnings estimates gained less than 1% on their earnings reaction days, according to Bespoke. That's less than half the average daily gain of 1.9% over the previous two decades.
Companies that missed estimates of earnings per share this month declined an average of 4.6%, compared with the historical average of 3.5%, according to a research report released Friday by Bespoke Investment Group.
Business income, which is lagging so far, is a particularly important area to watch.
According to Bespoke Investment Group, only 54% of companies that reported earnings exceeded their revenue estimates.
"That's really a concern," custom-made analysts wrote.
2. Fed orientations: The Federal Reserve is holding its two-day political meeting this week in April and May, which culminated in its interest rate decision and policy update Wednesday at 2:00 pm ET. 39; East.
It is widely accepted that the central bank will not change its interest rates. The FedWatch CME indicates that the market prescribes a 98% chance that rates will remain unchanged. Nevertheless, the meeting could evolve. Investors will listen to Fed Chairman Jerome Powell's views on the economy.
After raising rates four times last year, the Fed released gas in January, causing a frenzy in the financial markets. Investors have begun to wonder whether the next action of the central bank would be to reduce rates again, which should stimulate the economy. The Friday print on GDP, however, should have calmed these concerns, at least for the moment. The United States recorded a growth rate of 3.2% between January and March, as well as moderate inflation. This gives the Fed a little more leeway to let the economy run its course.
3. Jobs, jobs, jobs: Numerous key economic data are on the agenda for this week, including data on personal income, manufacturing and trade. However, the most important is probably the report on Friday jobs, to be presented at 8:30 am, Eastern Time, which includes non-farm payroll and hourly wages. The unemployment rate is expected to remain stable at 3.8%.
Last month, the total was better than expected, but wages were lagging behind.
Wage inflation has been stubbornly low, much to the dismay of market participants and central bankers. The Fed's inflation target is about 2%, but the wage inflation figures have raised questions about the use of inflation targeting.
In the run-up to the employment situation report, claims for EI benefits for the week ended April 27 are due on Thursday. Claims should rise to 215,000, according to Refinitiv.
4. King dollar: Less dubious comments from the Fed, as well as new economic data indicating that the US economy is healthy, could also inspire a rise in the US dollar.
Compared to their peers, the United States is the strongest economy in the market. And unless this week's Eurozone GDP surprises on the upside, there is nothing to dispute the dollar's supremacy. Although many good things are already profitable, analysts believe that it remains too attractive to be ignored.
On Thursday, the ICE US Dollar Index rose to its highest level since May 2017.
5. Coming this week:
Sunday – Milken World Conference Starts in California
The whole week – Japanese markets are closed until May 6 for Golden Week. These holidays are being held for the first time this year for the first time this year, which could lead to volatility in Asian markets in a context of reduced liquidity.
[ad_2]
Source link