Q2 Earnings Season Preview: Key Watchpoints For Markets

Russell Investments2022-07-03

SummaryMarkets see-saw on inflation reports, economic data releases.Three reasons why Q2 earnings season could be challenging.June employment report, CPI reading loom large for U.S. markets.On the ...

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Comments

BlogArca
2022-07-04
BlogArca
Good article, thanks for sharing
Jess261
2022-07-04
Jess261
Okay
wayjay1159
2022-07-04
wayjay1159
Second-quarter earnings will be interesting as the "period of easy comparable is over" and growth slows down.
Newnew
2022-07-04
Newnew
Hi
Newnew
2022-07-04
Newnew
Hi
Cvt
2022-07-04
Cvt
Q2 is coming and hope better than Q1

Leave a comment

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Eibel said this could emerge as the theme of the summer as markets struggle to process whether skyrocketing inflation has peaked or not.A classic example of this, he said, occurred on June 24 and June 30. On June 24, following the release of several PMI surveys that indicated economic growth may be cooling, the Dow Jones Industrial Average and the S&P 500® Index both climbed roughly 3% on the idea that inflation may have peaked, Eibel noted. “Then, on June 30, the Fed’s preferred gauge for inflation—the personal consumption expenditures (PCE) price index—showed that inflation isn’t improving much. In response, markets immediately sold off,” he observed.In Eibel’s opinion, this back-and-forth in markets between inflation fears, rising interest rates and recession worries will probably persist until a real catalyst—besides prices being cheaper than they were at the start of the year—emerges. “I wouldn’t be surprised if this give-and-take, so to speak, that we’re seeing in U.S. markets on a daily basis continues through much of July and August,” he stated.What To Expect During Q2 Earnings SeasonZhao and Eibel shifted the conversation to U.S. second-quarter earnings season, with Eibel remarking that the upcoming season is likely to be very interesting now that the period of easy comparablesis over. “By this, I mean that the timeframe when corporate earnings in 2021 were compared to corporate earnings in 2020 is now in the past,” he said, explaining that comparisons to 2020, when the economy was largely shut down, helped make 2021 earnings growth phenomenal. Now, S&P 500 companies are entering a period where comparables will be harder, he explained, as corporate earnings from an open economy in 2022 are measured against corporate earnings from an open economy in 2021.In addition, Eibel expects that it will be harder for companies to hit their earnings growth targets, as businesses will have greater difficulty passing along price increases to consumers. “Consumers are reaching the point where they can’t take much more in the way of price increases,” he noted. In addition, many businesses improved efficiencies during COVID-19, but are unlikely to become even more efficient moving forward, Eibel added.He said that in addition to the earnings themselves, forward guidance and commentary from companies will be a critical watchpoint during second-quarter earnings season. “This could, potentially, be a real mover for markets in the next month or so—as markets have largely gone down so far due to price, and not earnings. But if earnings and guidance really take a hit, we could see U.S. markets decline further,” Eibel stated.Other Potential Market Drivers: U.S. Employment Report, Q2 GDP And Russia-Ukraine WarZhao and Eibel wrapped up the segment with a look at other key watchpoints for investors over the next few months. The U.S. consumer price index (CPI) reading for June, due out in mid-July, will be one of them, Eibel said, especially since May’s CPI reading came in unexpectedly higher. In addition, the U.S. June employment report will be closely watched, he noted, as well as the country’s second-quarter GDP (gross domestic product) growth rate. “Remember, first-quarter GDP declined by 1.6%, so if the second-quarter number comes in negative as well, that would mean the U.S. is technically in a recession,” he remarked.Investors will also be paying close attention to geopolitical issues, including the Western response to the Russia-Ukraine conflict, as well as the status of China’s economic reopening, Eibel said. “A full reopening of China would help ease supply-chain snarls and satisfy global demand for goods,” he noted. Ultimately, with no shortage of hot-button issues for investors to focus on, Eibel expects the summer season in the Northern Hemisphere to be an interesting one for markets.","kind":"highlight","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9047660216,"gmtCreate":1656908685635,"gmtModify":1676535914400,"author":{"id":"3555973450718537","authorId":"3555973450718537","name":"BlogArca","avatar":"https://static.tigerbbs.com/e688d952c95db04948e16915bcc8833e","vip":1,"hat":"https://static.tigerbbs.com/b0a2963eb37c60c5d6d4a8dbcd266952","crmLevel":3,"crmLevelSwitch":1,"idStr":"3555973450718537","authorIdStr":"3555973450718537"},"htmlText":"Good article, thanks for sharing","listText":"Good article, thanks for sharing","text":"Good article, thanks for 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earnings will be interesting as the \"period of easy comparable is over\" and growth slows down.&nbsp;","listText":"Second-quarter earnings will be interesting as the \"period of easy comparable is over\" and growth slows down.&nbsp;","text":"Second-quarter earnings will be interesting as the \"period of easy comparable is over\" and growth slows down.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9047167326","repostId":2248798418,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9047184742,"gmtCreate":1656891913386,"gmtModify":1676535909287,"author":{"id":"3583016139705080","authorId":"3583016139705080","name":"Newnew","avatar":"https://static.tigerbbs.com/c1f72fa81dd8aa4df22904e9ff7b7c9b","vip":1,"crmLevel":3,"crmLevelSwitch":0,"idStr":"3583016139705080","authorIdStr":"3583016139705080"},"htmlText":"Hi&nbsp;","listText":"Hi&nbsp;","text":"Hi","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9047184742","repostId":2248798418,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9047184936,"gmtCreate":1656891887225,"gmtModify":1676535909261,"author":{"id":"3583016139705080","authorId":"3583016139705080","name":"Newnew","avatar":"https://static.tigerbbs.com/c1f72fa81dd8aa4df22904e9ff7b7c9b","vip":1,"crmLevel":3,"crmLevelSwitch":0,"idStr":"3583016139705080","authorIdStr":"3583016139705080"},"htmlText":"Hi&nbsp;","listText":"Hi&nbsp;","text":"Hi","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9047184936","repostId":2248798418,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9047117391,"gmtCreate":1656891491213,"gmtModify":1676535909038,"author":{"id":"3579235597126488","authorId":"3579235597126488","name":"Cvt","avatar":"https://static.tigerbbs.com/c8fda02901ec7a98b51fe8e84d016ab2","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3579235597126488","authorIdStr":"3579235597126488"},"htmlText":"Q2 is coming and hope better than Q1","listText":"Q2 is coming and hope better than Q1","text":"Q2 is coming and hope better than Q1","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9047117391","repostId":2248798418,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":673,"commentSize":48,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; 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