On your marks! Get set for 4th quarter earnings

Market Update

 

Fourth quarter earnings

 

The fourth quarter earnings season kicks off this Friday with results coming from several major banks and financial institutions. Bank of America, Wells Fargo, JPMorgan Chase, Citigroup, Bank of New York Mellon, BlackRock and PNC Financial Services Group are all scheduled to release quarterly results as are Delta Air Lines and UnitedHealth Group.

 

Tech meltdown

 

As we know, 2022 was a particularly difficult year for investors with both equity and bond markets down sharply. All the major US stock indices slumped from the lofty record highs seen at the beginning of the year, or as with the tech-heavy NASDAQ, in November 2021. For the record, the S&P 500 lost 20% in 2022 while the NASDAQ 100 slumped 33% as previous market darlings such as Tesla and Meta Platforms (formerly Facebook) fell out of favour. Last year Tesla fell 73%, Meta was down 75%, Amazon ended 52% lower, Nvidia lost 65%, with Apple and Microsoft down 32% and 37% respectively. We will hear from the tech sector in a few weeks’ time. But for now, investors will focus on the banking giants. It will be interesting to see how they have fared in an environment where interest rates have moved sharply higher, which should have helped to boost their profitability.

 

Forward guidance

 

But so much will depend on any forward guidance released alongside the numbers, and how these companies view the US economic outlook. While there are plenty of analysts pointing at the inverted yield curve and predicting a recession this year, others are more sanguine. The US consumer has proved remarkably resilient, and unemployment is low. For those that see the US Federal Reserve soon ending its series of interest hikes, the outlook for this year may be brighter than last.