Earnings season: What should investors expect?

Earnings season… Big banks, including JPMorgan and Citigroup, kick off earnings this Friday.

Investors expect more of the same…

• A negative impact on profit margins from factors like inflation and inventory building up.
• A strong US dollar is negatively impacting many US companies’ earnings.

Investors expect these earnings to give a glimpse into the economy’s health:

• JPMorgan on Oct 14. Expect the CEO of the largest US bank to provide insights into the US economy.
• Tesla on Oct. 19. Another sign on the consumer’s state from the world’s most valuable carmaker.
• Apple on Oct. 27. The global behemoth will show how consumer demand is holding up and the state of supply chains.

Many companies have already prepped investors with early revisions to earnings and growth. Earnings reports may just confirm what we already know — companies are operating in a very challenging environment.

A Bloomberg survey shows that 60% of respondents expect earnings to push the S&P 500 lower.

What about positive surprises? In the last quarter, companies that beat earnings saw a brief rally — which failed to hold up. Again, any positive momentum leading to price rallies could be short-lived. But why?

The macro-environment and economic data continue to dominate prices. The CPI inflation report covering US price trends in September releases this Thursday (Oct. 13) — and will signal whether we’re getting a 0.50% or 0.75% point increase.