{"id":34317,"date":"2023-07-11T17:09:38","date_gmt":"2023-07-11T21:09:38","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/earnings-season-to-give-stock-market-investors-update-on-heavily-debated-consumer-health-says-goldman\/"},"modified":"2023-07-11T17:09:40","modified_gmt":"2023-07-11T21:09:40","slug":"earnings-season-to-give-stock-market-investors-update-on-heavily-debated-consumer-health-says-goldman","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=34317","title":{"rendered":"Earnings season to give stock-market investors update on \u2018heavily debated\u2019 consumer health, says Goldman"},"content":{"rendered":"
\n

With the U.S. second-quarter earnings reporting season kicking off, investors will get a view of consumer health in an economy still stuck with high inflation as the stock market climbs this year.<\/p>\n

\u201cInvestors have heavily debated the health of the consumer, and results from the consumer discretionary and staples sectors will provide a status update,\u201d Goldman Sachs Group analysts led by chief U.S. equity strategist David Kostin said in a recent research note.\u00a0<\/p>\n

\n

Consensus estimates see profits of companies in the S&P 500 index during the second quarter falling 9% on a year-over-year basis, according to the note. While the index\u2019s net profit margins are seen shrinking year over year for the fourth straight quarter, analysts expect consumer-discretionary stocks to see theirs expand the most among the few sectors with anticipated expansions, Goldman said.<\/p>\n

The S&P 500\u2019s consumer-discretionary sector index
\n SP500.25,
\n +0.86%<\/bg-quote>
\n has surged almost 33% this year based on Tuesday afternoon trading levels, compared with a slightly more than 15% gain for the broader index, according to FactSet data, at last check. By contrast, the consumer-staples sector
\n SP500.30,
\n +0.14%<\/bg-quote>
\n was down more than 1% so far this year over the same period.<\/p>\n

\u201cOur consumer staples analysts forecast an end to the food industry\u2019s exceptional growth as inflation-led sales growth moderate,\u201d the Goldman note says. \u201c2023 EPS estimates for consumer staples have been cut by 1% since the start\u201d of the second quarter.\u00a0<\/p>\n

Within the sector, Conagra Brands Inc.
\n CAG,
\n +0.64%<\/bg-quote>
\n and PepsiCo Inc.
\n PEP,
\n -0.17%<\/bg-quote>
\n are expected to report their latest quarterly earnings results on Thursday, the note shows.\u00a0<\/p>\n

Meanwhile, the S&P 500\u2019s consumer-discretionary sector has benefited this year from homebuilders, a pocket of the stock market that has soared, as well as a pair of megacap companies often associated with Big Tech, Tesla Inc.
\n TSLA,
\n +0.07%<\/bg-quote>
\n and Amazon.com Inc.
\n AMZN,
\n +1.30%<\/bg-quote>,<\/span>
\n according to FactSet data. Big Tech has been driving the S&P 500\u2019s gains in 2023.<\/p>\n

On the homebuilding front, Goldman analysts cited Lennar Corp.
\n LEN,
\n +1.17%<\/bg-quote>
\n as seeing \u201ccontinued demand strength heading into the summer.\u201d\u00a0<\/p>\n

Read:<\/strong> Homebuilder ETF outperforms S&P 500, industry\u2019s stocks still \u2018cheap\u2019 in 2023 market rally<\/p>\n

Looking at the S&P 500 broadly, \u201cforward earnings revisions appear to have bottomed,\u201d after bottom-up consensus estimates for earnings per share in 2023 and 2024 \u201csteadily declined\u201d between the start of the year and first-quarter earnings season, according to the note.\u00a0<\/p>\n

Goldman has forecast the S&P 500 will see EPS of $224 in 2023, which represents 1% growth and is above consensus estimates for $220, according to the note. The baseline forecast assumes the U.S. economy \u201cavoids a recession and inflation falls slowly.\u201d\u00a0<\/p>\n

But Goldman thinks predictions for next year are \u201ctoo optimistic.\u201d Goldman\u2019s 2024 EPS forecast of $237, representing 5% growth, remains below bottom-up consensus estimates of $244, the note says.\u00a0<\/p>\n

During the second-quarter earnings season, Goldman will be monitoring \u201ccompanies\u2019 ability to push sales to drive profits,\u201d the bank\u2019s analysts said. \u201cFirms can expand margins provided price inflation outpaces input cost inflation.\u201d<\/p>\n

A reading from the U.S. consumer-price index on Wednesday will provide a measure of inflation in June. While the surge in cost of living has eased from its 2022 peak, the Federal Reserve remains focused on lowering inflation to its 2% target.<\/p>\n

On Tuesday afternoon the U.S. stock market was trading up ahead of the CPI inflation report, with the S&P 500
\n SPX,
\n +0.67%<\/bg-quote>
\n rising 0.3% while the Dow Jones Industrial Average
\n DJIA,
\n +0.93%<\/bg-quote>
\n climbed 0.6% and the Nasdaq Composite
\n COMP,
\n +0.55%<\/bg-quote>
\n edged 0.1% higher, according to FactSet data, at last check.\u00a0<\/p>\n

The S&P 500 was trading around 4,422 on Tuesday afternoon, below Goldman\u2019s 2023 forecast. The bank\u2019s analysts expect the index will end this year at 4,500.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

With the U.S. second-quarter earnings reporting season kicking off, investors will get a view of consumer health in an economy still stuck with high inflation as the stock market climbs this year. \u201cInvestors have heavily debated the health of the consumer, and results from the consumer discretionary and staples sectors will provide a status update,\u201d […]<\/p>\n","protected":false},"author":1,"featured_media":34318,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-34317","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nEarnings season to give stock-market investors update on \u2018heavily debated\u2019 consumer health, says Goldman | iFintechWorld<\/title>\n<meta name=\"description\" content=\"With the U.S. second-quarter earnings reporting 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