Wall Street analysts expect the best profit growth in three years – this is where the biggest increases are seen

• Major US banks have opened reporting season
• Wall Street expects best earnings growth in three years
• Biggest earnings per share growth not expected from Big Tech

With Goldman Sachs, JPMorgan, Citigroup and Wells Fargo, the major US banks kicked off the reporting season for the fourth quarter of 2024 last week and convinced investors with their numbers – all of which exceeded expectations. Wall Street analysts are confident that the current quarterly reporting season will be positive overall.

Some imponderables

MarketWatch reports that there are some uncertainties and recent market volatility will likely be a topic on earnings calls. For example, the question arises as to whether interest rates will be further reduced and how the US economy will develop during Donald Trump’s second term in office. For example, markets would weigh between the prospect of more deregulation under Trump and the prospect of higher tariffs.

With the relationship between Trump and Tesla boss Elon Musk and Musk and Vivek Ramaswamy’s plans to coordinate deep government cuts and their impact on jobs and businesses, there are further uncertainties, according to Jay Woods, global strategist at Freedom Capital Markets. The strong US dollar and CEO changes at companies like Starbucks and Nike should also be taken into account.

Still, despite “some bumps along the way,” Woods believes in “a run” from the second quarter to the end of the year. However, he warns: “It will be much more volatile than Trump 1.0, that’s for sure. We’re already seeing it.”

Wall Street analysts expect the best earnings growth in three years

For the fourth quarter, Wall Street analysts, as MarketWatch writes, citing a FactSet report, expect earnings per share for S&P 500 companies to rise 11.7 percent, the best growth for the broad US index since the fourth quarter quarter of 2021 would mean. At that time, price increases and disruptions caused by the corona pandemic had a negative impact on the results of some industries. Expectations for net profit margins for S&P 500 companies would be 12 percent in the fourth quarter.

However, Woods points out that the big tech companies that support markets have begun to weaken, with many stocks in the S&P 500 trading below their 200-day moving average. He therefore warns of bumpy next few weeks. The few large tech companies are likely to remain the heavyweights in the index, but analysts do not see the greatest earnings growth per share in this industry, reports MarketWatch. Analysts would continue to debate whether the billions spent by companies like NVIDIA, which benefit from the hype around artificial intelligence, are really worth it.

According to FactSet, however, the largest increases are expected in the financial sector. This is expected to achieve an increase in profits of 39.5 percent per share, while within the sector the banks are expected to grow profits by 187 percent. Much of this expected growth was due to weaker performance a year ago, when caution over the economy and FDIC-related fees weighed on earnings.

Editorial team finanzen.net

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