š Youāll be spoiled for choice this week ā if youāre into company earnings, that is. Heavyweights Tesla, Microsoft, Alphabet, and Visa will open their books, as well as a few key names from the industrials, consumer staples, and healthcare sectors. All put together, weāll get an idea of how the economy held up last quarter. Analysts predict a decent run: S&P 500 companies are expected to have made 7.3% more profit last quarter versus the same time last year. And because companies tend to beat expectations by around 6 to 7% (at least over the past few years), that uptick could actually land in the double digits. ā³ That said, history doesnāt always repeat itself. Of the S&P 500 companies that have reported so far, only 69% of companies have beaten estimates ā below the five-year average. More worryingly, a few have kept their outlooks for this year to themselves, blaming tariffs and the unpredictable economy. Watch to see if other bellwether firms (like Caterpillar or Microsoft) do the same. Their fortunes or failures tend to reflect broader trends, so if they join that chorus, the lack of certainty could spook markets more than a simple miss. š Keep an eye on companies and sectors that rely on global trade or consumer demand. Think Boeing, Tesla, Visa, and Ford. We donāt need to tell you why the first is worth watching (cough, tariffs, cough), but the second will indicate whether well-off US shoppers are still spending. Thatās important: the top 10% of American earners now make up nearly half of the countryās total consumer spending ā the biggest driver of the economy. And so far, the consumer discretionary sector (selling nice-to-haves, not must-have products) has posted the biggest drop in sales growth of all the S&P 500 sectors this earnings season. That could indicate the reversal of the wealth effect: with stock market fluctuations undermining even the richest householdsā financial confidence, luxury-loving shoppers could start tightening their fine leather belts. š So yes, a few pleasant surprises this earnings season could entice investors back toward stocks ā especially if Big Tech and major consumer firms saw their wallets widen. But if more firms hold back outlooks, report slimming margins, or see wealthy spendersā¦ well, stop spending, then investors could be pushed further into self-protection mode instead. |
