Top stock market events this week include the third-quarter earnings season and stimulus talks.
“Third-quarter earnings season kicks off this week in earnest with a plethora of major banks reporting results.
While analysts have recently upgraded their expectations for earnings results across S&P 500 companies, most companies are still likely to report declines in profits over last year, with the effects of the coronavirus pandemic still lingering.
Q3 earnings season expectations
Second-quarter corporate earnings overwhelmingly topped a low bar of expectations, with Wall Street having braced for businesses to see activity hit a nadir during the worst of virus-related stay-in-place orders in late spring and early summer.
A record 84% of S&P 500 companies reported positive surprises for earnings per share (EPS) in the second quarter, even as EPS declined, in aggregate, by more than 30%, according to data from FactSet.
Those better-than-feared second-quarter results have also led analysts to deliver rare upward revisions to their estimates for third-quarter results – in turn leaving a potential for companies to disappoint against heightened expectations.
“The Q3 bottom-up EPS estimate (which is an aggregation of the median EPS estimates for Q3 for all the companies in the index and can be used as a proxy for the earnings for the index) increased by 4.1% (to $33.10 from $31.78) from June 30 to September 30,” FactSet’s John Butters said in a note on Friday. Six sectors recorded increases in estimates, including the consumer discretionary, energy, financials and materials sectors.
During the past five years, bottom-up EPS estimates had been revised down by an average 5.0%, Butters added. This marked the first time analysts raised their EPS estimates for S&P 500 companies during a quarter since the second quarter of 2018. Prior to 2018, S&P 500 EPS estimates hadn’t been raised since 2010.
But even with their upward revisions, analysts still expect that S&P 500 EPS will drop in aggregate by 20.5% over last year for the third quarter, according to FactSet data. If realized, this would mark the second largest year-over-year drop in earnings for the index since the second quarter of 2009.”
Stocks that can move due to earnings releases include the following. The list includes bank stocks, airline stocks, and more.
Tuesday: JPMorgan Chase (JPM), BlackRock (BLK), Johnson & Johnson (JNJ), Fastenal (FAST), Delta Airlines (DAL), Citigroup (C) before market open
Wednesday: Bank of America (BAC), PNC Financial Services Group (PNC), The Progressive Corp. (PGR), UnitedHealth Group (UNH), US Bancorp (USB), Goldman Sachs (GS), Wells Fargo (WFC) before market open; Alcoa (AA), United Airlines (UAL) after market close
Thursday: Charles Schwab (SCHW), Truist Financial Corp (TFC), Walgreens Boots Alliance (WBA), Morgan Stanley (MS) before market open
Friday: Bank of New York Mellon (BK), VF Corp (VFC), E-Trade Financial Corp (ETFC), Schlumberger (SLB), Kansas City Southern (KSU), Honeywell (HON), Citizens Financial Group (CFG), Ally Financial (ALLY), State Street Corp (STT)
Stock market data: Yahoo Finance