The start of the third-quarter earnings season was good in the United States, with most S&P 500 companies reporting results so far that have exceeded analyst expectations by a wide margin, according to research firm FactSet, which publishes analytics and statistics for publicly traded corporate earnings reports. Said John Butters, vice president And Chief Earnings Analyst at FactSet: “At this point, EPS for a large number of S&P 500 companies were above estimates and above average for the third quarter.” He added, “Because of these positive surprises, the index is recording higher profits. The index is now recording the third highest annual profit growth since the third quarter of 2010.”
indicator technical analysis S&P 500 :
Technically, these rises come after the wave of decline that the index witnessed in September trading from its historical high at 4549.50 and fell by more than 5%, penetrating the 100-day average before stopping near the 4244 support level, now at the time of writing this report the price of the index It is trading within 4523.50 at the lower boundary of the ascending price channel in which the index has been trading since the beginning of the recovery from the collapse that followed the outbreak of the Corona virus in the world. The breach of the resistance level 4549 and closing above it will open the way for more rises towards the level of 4700, as indicated by most of the positive expectations. Press here To follow the latest developments in the price of the S&P 500 index in real time.
Positive Quarterly Earnings Outlook and Beginning with Banks:
And most expectations indicated that companies’ results in the third quarter will be very positive, despite some concerns about supply chain problems and rising costs. Corporate earnings in the third quarter are expected to rise 27.6% year over year, according to FactSet. This will be the third highest growth rate since 2010. Bank earnings will be the main focus for investors this week, with results due from JPMorgan, Bank of America, Morgan Stanley, Citigroup and Goldman Sachs. After months of range-bound price moves for bank stocks, analysts are looking to catalysts that could fuel the next rally. Most analysts’ expectations in Wall Street indicate that loan growth, interest rates and reserve issuances will play a positive role in the reports of major banks.
Concerns about inflation and supply chains:
But despite optimism dominating expectations, there are some concerns and warning signs about inflation levels and problems in supply chains that could affect the performance of companies, in addition to the negative job numbers released at the end of last week. The risks of rising inflation, and the onset of policy tightening by the Fed, are likely to lead to a choppy earnings season. There were some warnings in this regard last week, when Share price collapsed Bed Bath and Beyond increased by 25% after the company said it saw a sharp decline in sales in August. The company said it faced a significant increase in costs due to inflation over the summer months, especially towards the end of the second quarter in August, eroding profits. FactSet data shows that 47 companies on the S&P 500 issued negative earnings guidance for the third quarter, and 56 companies issued positive forecasts.
High expectations for the fourth quarter
However, according to a FactSet analyst poll, things could improve further in the fourth quarter, making 2021 even stronger. “Analysts also expect earnings growth of more than 20% in the fourth quarter and more than 40% year-over-year growth,” said Butters. “These above-average growth rates can be attributed to a combination of higher earnings for 2021 compared to weaker earnings in 2020 due to the negative impact of COVID-19 on a number of industries,” he added.
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