The third-quarter earnings season for large US companies kicked off this week as the Fed raised interest rates and investors tried to reassess the durability of stock valuations and corporate profits. this will give analysts the most comprehensive understanding yet of how companies maintain the status quo amid rising costs, rising interest rates and a stronger dollar squeezing overseas revenues.

Judging from the fierce reaction to several companies that have announced results ahead of time, the upcoming results seem unlikely to appease markets that have been particularly volatile recently. Us stocks fell 2.8 per cent on Friday after the latest jobs report showed that the labor market remained strong, which may strengthen the case for further sharp interest rate hikes in the US. Even after a brief rally earlier this week, the S & P 500 is still on track for its worst year since the 2008 financial crisis.

Analysts expect third-quarter earnings for companies in the s & p 500 to grow 2.4%, according to the data. Of the s & p 500 companies that have reported results, a small number of companies reported overall earnings up just 0.4% from a year earlier.

Nadia Nadia Lovell, senior U.S. equity strategist at UBS Global Wealth Management (UBS Global Wealth Management), said: "I don't think this earnings report painted a very good picture. "

In the past month, including FedEx Corp (FedEx Corp.), CarMax Inc., Nike Inc (Nike Inc.) Including the stock market rose sharply. After disappointing the market with its financial results or comments, Carnival Corp. And American Federal Telecom (fedex Corp.) All stocks fell by double digits in one trading day.

This week, investors will pay attention to the performance of big banks such as JPMorgan Chase & Co and Citigroup Inc. Wells Fargo & Co, PepsiCo Inc, Delta Airlines and other achievements will also be concerned.

The list of companies scheduled to report results in the coming weeks will give investors an idea of how the Fed's actions will affect the economy as a whole. Higher interest rates will cool demand by raising borrowing costs for businesses and households, but these effects will take time to show. Companies are still trying to rein in rising costs without alienating consumers tired of rising prices, and some are dealing with the negative impact of a stronger dollar on revenues in other countries.

In recent months, Wall Street analysts have lowered their optimistic forecasts for corporate profits. Analysts cut their third-quarter earnings forecasts for the s & p 500 by 6.8% in the third quarter, the biggest cut in the reporting period since the second quarter of 2020, according to data. Analysts also cut their forecasts for the fourth quarter and 2023.

This suggests that share prices may be higher than an oft-quoted valuation indicator suggests. The data show that the S & P 500 was trading at 15.9 times forward earnings last week, in line with its 20-year average of 15.7 times. But if earnings forecasts are too optimistic, it means that share prices are not as cheap as they seem.

The market has been so focused on clues to the direction of interest rates that even investors who think companies are doing a good job in managing inflation do not necessarily think that the earnings season will push stocks higher again.