Goldman Sachs strategists are predicting essentially the most dismal earnings season because the height of the COVID-19 pandemic this quarter as an ongoing economic slowdown hammers top firms.
Analysts project that earnings per share results for firms listed within the broad-based S&P 500 will plunge by 7% in the primary quarter in comparison with the identical period one 12 months ago, Goldman’s Lily Calcagnini and David Kostin said in a client note reported by Bloomberg on Thursday.
“If analyst projections are realized, this quarter will represent the trough in S&P 500 earnings growth,” the analysts said, adding that profit margins are more likely to shrink given the tough conditions.
The newest round of corporate earnings will emerge as US firms weather concerns in regards to the stability of the US banking sector and the Federal Reserve’s ongoing slate of rate of interest hikes.
The Fed will hold its next policy meeting on May 2-3.
Investors will get their first round of major results on April 14, when BlackRock, Wells Fargo, JPMorgan Chase and Citigroup are all slated to report their quarterly earnings.
The Goldman strategists pointed to several key trends that Wall Street can be tracking closely in the course of the uncertain period, including signs of a slowdown in money spending, company initiatives within the burgeoning artificial intelligence sector, China’s effort to re-emerge from COVID-19 lockdowns and profit margins at US firms.
The experts see bank earnings jumping by 11% in comparison with last 12 months, despite lingering “uncertainty” in regards to the economic outlook.
US stocks have been resilient this 12 months despite ongoing chaos within the wake of the failures of Silicon Valley Bank and Signature Bank of Latest York.
The S&P 500 is up nearly 7% because the start of the 12 months, while the tech-heavy Nasdaq Composite Index has jumped by 15% over the identical period.
The Dow Jones Industrial Average has been flat.
The Nasdaq 100, which tracks large-cap firms, entered bull market territory last month during a rally in tech stocks.
