Source: Golden Ten Data

As the first quarter earnings report is about to be released, the biggest battle with inflation for the business and its customers may be over. And the smaller challenges are probably just beginning.

Performance will provide us with a more comprehensive understanding of what kind of year 2024 will be, as at least a few factors have pushed housing prices up or continued to rise in the past three years.

2021 is a period of economic reopening after the pandemic and supply chain crisis. In 2022, the Russian-Ukrainian conflict broke out. By 2023, as the Federal Reserve raised interest rates to control price increases, it was difficult for consumers to bear the rise in prices for basic household goods, and people began to wonder whether the company had taken advantage of three years of turmoil to raise prices.

Matt Stucky, chief equity investment manager at Northwestern Mutual Wealth Management (Northwestern Mutual Wealth Management), said that these historic disruptions may actually only be part of the Fed's difficult battle against high inflation. “Now we're in the hardest part,” he said.

Stucky believes that strong employment trends and wage growth have kept high prices and interest rates stable, but as this trend stabilizes, consumers' cautious attitudes and expectations of an eventual economic slowdown will remain unchanged. Skeptics continue to be shocked by March's astonishing employment data, while others think the US is beginning to accept the current situation as the new normal.

“The fact that the labor market is so strong shows that companies and the economy are adapting to high interest rates,” GDS Wealth Management Chief Investment Officer Glen Smith said in an email comment last week.

$Delta Air Lines (DAL.US)$und$JPMorgan (JPM.US)$Quarterly earnings will be announced this week. Wall Street expects that overall, the profits of US companies will continue to grow moderately, and even if consumer demand still exists, companies will continue to raise prices and cut costs to boost profits.

However, the results for the first quarter are likely to be similar to the fourth quarter of last year. Even as the market rebounds, there are deeper signs of pessimism among business executives. The plight of low-income consumers, rising bill arrears, and deep cracks in commercial real estate remain concerns.

The growth of the big tech industry may continue to save the entire market, but investment in artificial intelligence and antitrust actions may take years to bear fruit. This is a test of investors' patience in the debate over whether the AI boom is actually just another tech bubble.

“Like the previous two quarters, the tech industry remains a key growth driver in the first quarter of 2024,” Sheraz Mian, director of research at Zacks, wrote last month. “Had it not been for the strong earnings growth in the tech sector, total earnings for the rest of the index would be slightly negative.”

According to FactSet data, Wall Street analysts generally expect$S&P 500 Index (.SPX.US)$The company's earnings per share for the first quarter will increase by 3.2%. This is lower than the 5.7% growth rate predicted at the end of December last year.

They also expect a profit margin of 11.5% for the first quarter, according to FactSet. This will be up from 11.2% in the previous quarter, as some US companies are maintaining profits through cost cuts and layoffs.

Analysts usually lower expectations as the company's earnings date approaches, but FactSet's senior profit analyst John Butters (John Butters) pointed out that the degree to which analysts revised their forecasts was below average, in stark contrast to the company's own expectations. Contrary to the company's prospects.

“Although analysts' expectations for the first quarter of S&P 500 companies were less revised than the recent average, the company is more pessimistic about earnings prospects for the first quarter than the recent average,” he said in a report late last month. “As a result, the estimated earnings for the S&P 500 are now lower compared to expectations at the beginning of the quarter,” he added.

Seventy-nine companies in the S&P 500 have published pessimistic profit forecasts. This is the second highest level since the second quarter of 2019, and according to FactSet, 33 predictions are positive.

This week's earnings highlights

Outside of bank stocks, Wall Street will keep a close eye on Delta's performance, and the company will release earnings on Wednesday. Bank of America Merrill Lynch analyst Andrew Didora (Andrew Didora) said in a research report last Thursday that he will focus on summer demand, corporate travel trends, and fuel prices.

Analysts at Morgan Stanley said that when Delta Air Lines entered its first quarter earnings season, market expectations were unusually high, due to years of recovery from the pandemic.

“Everyone will be watching the elasticity of the summer booking curve, albeit on the domestic and transatlantic side, especially in the face of very difficult comparisons,” they said. “The company's progress also needs to be evident.”

One point that cannot be overlooked J.P. Morgan, Jamie Dimon (Jamie Dimon): When J.P. Morgan Chase reports first-quarter results on Friday, Wall Street will focus on CEO Jamie Dimon's views on the overall economy. As described in the MarketWatch bank earnings preview story, the first quarter saw an increase in trading activity, but expectations of interest rate cuts have weakened, which may stimulate the economy to some extent as it makes borrowing easier, but it will erode banks' profits.

Although seen as a barometer of the economy, J.P. Morgan is much larger and more diverse than its regional rivals. That means it's more stable than other tremors in the banking industry.

Editor/jayden