The Standard & Poor’s 500 companies will start reporting on business conditions in Q2 in just a few days. Companies that are comfortable may also give a glimpse into their outlook for Q3 and beyond.1,2 Investors will hear from money center banks, focusing on how interest rates affect business activity. Then, a wide range of companies will follow, and by the end of the month, most S&P 500 companies will have checked in with results.1,2 Going into what is referred to as “earning season,” FactSet research estimates the S&P 500's (year-over-year) earnings growth rate at 8.8%. That would be the highest year-over-year growth rate since Q1 2022 (9.4%). Remember when there was a lot of talk about a recession? Not so much anymore.1,2 Remember that forecasts and forward-looking statements are based on assumptions, subject to revision without notice, and may not materialize. So, in about 30 days, we’ll know if FactSet was more right than wrong. Companies tend to be more connected to the economy's highs and lows than many people realize. The accompanying chart shows that over 80% of companies discussed inflation in early 2022. However, as inflation has trended lower, fewer companies have mentioned rising prices on conference calls with shareholders.1,2 |
Over the next few weeks, it’s best to prepare for some volatility. Some investors may read a lot into corporate reports, while others recognize that companies check in with numbers every 90 days, which can be a short time to evaluate performance. So expect some price swings and be surprised if the markets don’t overreact at least once or twice. Are you anticipating a company’s earnings? Call me, and I can show you the information our professionals have compiled. |
1. Insight.FactSet.com, June 21, 2024. “Earnings Insight.” |
What’s the Q3 Business Outlook?
