This round of earnings comes during a time where investors are looking for something positive to get themselves out of the hole that’s been created in the stock market. After exiting bear market territory a couple of weeks ago, the market is teetering at the same area, and all it takes is some bad news for us to get back to the bear market. With economic conditions the way they are, the last straw for the stock market would be the downfall of Corporate America, and things aren’t looking positive.
Companies that kicked off this latest season of earnings haven’t had the best results, and more warning signs instead. Only 60 percent of companies from the S&P 500 index that have reported earnings beat expectations, which is below average according to FactSet. Growth estimates have fallen by nearly 2 percent, and reported earnings tell us that companies are starting to prepare for some turmoil. Some of the first to go were the big banks, with Morgan Stanley missing expectations and JPMorgan posting lower profits. Although JPMorgan said that they see a minimal risk of an upcoming recession, the company has set aside money to help compensate for possible loan losses, signaling uncertainty on their end. Fears of a recession are the clouds surrounding these companies with interest rate hikes posing a threat to the economy, but the picture will become much clearer as more companies release their results.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.