{"id":32843,"date":"2023-07-07T20:27:36","date_gmt":"2023-07-08T00:27:36","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/second-quarter-earnings-are-coming-what-that-means-for-stocks\/"},"modified":"2023-07-07T20:27:37","modified_gmt":"2023-07-08T00:27:37","slug":"second-quarter-earnings-are-coming-what-that-means-for-stocks","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=32843","title":{"rendered":"Second-Quarter Earnings Are Coming. What That Means for Stocks"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"SB50340678401839373980104590072184072182868\">\n<div data-layout=\"wrap\n              \" data-layout-mobile=\"\" class=\"\n        media-object\n        type-InsetMediaIllustration\n          wrap\n  article__inset\n        article__inset--type-InsetMediaIllustration\n          article__inset--wrap\n    article__inset--lead\n  \"><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-wrap\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>Earnings season begins this coming week with big U.S. banks reporting. The<br \/>\n        S&amp;P 500<br \/>\n       might not soar from the second-quarter reports, but some areas of the market might.<\/p>\n<p>\n        JPMorgan Chase<br \/>\n       (ticker: JPM),<br \/>\n        Wells Fargo<br \/>\n       (WFC), and<br \/>\n        Citigroup<br \/>\n       (C) report on Friday. Earlier in the week,<br \/>\n        Delta Air Lines<br \/>\n       (DAL) and<br \/>\n        PepsiCo<br \/>\n       (PEP) will report their latest quarterly results. All will provide important clues to demand as the economy adjusts to the ongoing impact of higher interest rates. <\/p>\n<div class=\"paywall\">\n<p>The good news is that with Friday\u2019s data showing a slowing job market, the Federal Reserve could soon stop hiking rates. Stocks ticked lower on Friday as investors digested the June employment report, and posted losses for the holiday-shortened week. The S&amp;P 500 ended it down 1.2%, while the<br \/>\n        Dow Jones Industrial Average<br \/>\n       dropped 2% and the<br \/>\n        Nasdaq Composite<br \/>\n       slid 0.9%. <\/p>\n<p>The S&amp;P 500 is still up 23% from its low in October, however, and stocks are expensive. The index\u2019s 12-month forward price\/earnings multiple has climbed to 19.2 from 15 at the start of the rally, driven by hefty gains in some of the biggest technology stocks.<\/p>\n<p>That\u2019s a high P\/E ratio, considering Friday\u2019s 4.1% yield on a risk-free 10 year Treasury. The S&amp;P 500\u2019s earnings yield of 5.2%, based on forward 12-month results, is only about a percentage point higher, which isn\u2019t much extra return, based on historic norms. Earnings would have to surpass expectations by a wide margin to justify current stock prices, and that isn\u2019t likely to happen.<\/p>\n<p>The capitalization-weighted S&amp;P 500 is heavily influenced by the performance of Big Tech. If some of this year\u2019s winners don\u2019t dazzle investors with their quarterly numbers, that could spell bad news for the index. That\u2019s why nontech stocks might be a better bet as earnings season starts to unfold.<\/p>\n<p>The<br \/>\n        Invesco S&amp;P 500 Equal Weight<br \/>\n       exchange-traded fund (RSP), which weights each stock in the index equally, has rallied by a more modest 16.6% from its fall low, and trades for about 15 times expected earnings, a 20% discount to the S&amp;P 500, according to FactSet. <\/p>\n<p>Bank stocks in particular look like a good bet. The<br \/>\n        SPDR S&amp;P Bank<br \/>\n       ETF (KBE) is down 21% this year and trades for 7.7 times earnings, less than half the multiple of the Invesco fund. Industry earnings estimates are down 16% over the past six months, according to FactSet, reflecting analysts\u2019 concerns about loan volumes and lower deal activity. Three U.S. banks failed this past spring, and that is also weighing on the stocks. But much of the pessimism is priced in, and good results from the nation\u2019s biggest banks could give the sector a lift.<\/p>\n<p>\u201cWe do think banks are going to get bid in the second half,\u201d says Thomas Hayes, founder of Great Hill Capital.<\/p>\n<p>Don\u2019t expect earnings season to power the S&amp;P 500 much higher, but look for opportunities in underperforming sectors.<\/p>\n<div data-layout=\"inline\n              \" data-layout-mobile=\"\" class=\"\n        media-object\n        type-InsetMediaIllustration\n          inline\n    scope-web|mobileapps\n  article__inset\n        article__inset--type-InsetMediaIllustration\n          article__inset--inline\n  \"><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p><strong>Write to <\/strong>Jacob Sonenshine at jacob.sonenshine@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/articles\/second-quarter-earnings-are-coming-what-that-means-for-stocks-b1443eef?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Earnings season begins this coming week with big U.S. banks reporting. The S&amp;P 500 might not soar from the second-quarter reports, but some areas of the market might. JPMorgan Chase (ticker: JPM), Wells Fargo (WFC), and Citigroup (C) report on Friday. Earlier in the week, Delta Air Lines (DAL) and PepsiCo (PEP) will report their [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":32844,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-32843","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Second-Quarter Earnings Are Coming. What That Means for Stocks | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Earnings season begins this coming week with big U.S. banks reporting. 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