By Martin Baccardax
Yogi Berra taught us that "it ain't over till it's over," but investors do tend to stop paying attention to the quarterly earnings season before it's actually completed. And that might be a mistake.
Stocks are wavering into the final trading days of the year, and the hoped-for December rally has yet to materialize as the S&P 500 and the tech-focused Nasdaq remain in negative territory for the month.
Investors are broadly bullish on both stock performance and corporate profit gains heading into next year, but mixed readings on the state of the job market and a looming inflation report that could temper expectations for Federal Reserve rate cuts are keeping sentiment in check. There's also the lingering uncertainty over the fate of President Donald Trump's signature tariff policies.
With those and other issues looming, Wall Street may glean key insights from this week's "forgotten" updates at the tail end of a surprisingly solid earnings season.
LSEG data suggests collective third-quarter profits for the S&P 500 rose 15% from last year to just over $602 billion, a $30 billion improvement from earlier forecasts.
None of this week's earnings slate will affect the third-quarter tally and will only have a modest impact on the LSEG forecast for an 8.5% advance in fourth-quarter profits. But that doesn't mean they won't provide useful insight.
Micron Technology, which reports its fiscal first-quarter earnings after the close on Wednesday, will offer a key glimpse into semiconductor demand just as investors are looking to rotate out of the tech sector and into cyclical stocks.
"This will be watched closely, especially given how recent reports from fellow AI players, Oracle and Broadcom, rattled the tech sector," said David Morrison, senior market analyst at Trade Nation.
A great read on that trade will come from the fiscal second-quarter update from FedEx, expected after the bell on Thursday, as it comments on business and activity trends into 2026.
Those outlooks are crucial in an economy that is still seeing huge advances in some sectors, and recession-like conditions in others.
"The ' K-shaped' economy makes for a fragmented consumer," said Jeffery Roach, chief economist at LPL Financial. "The affluent are fine, if not thriving, while lower-income households struggle with high rent payments, rising delinquencies, and job uncertainty."
Nike's second-quarter earnings, slated for Thursday, will speak to many of those themes, as well as the impact of tariffs put in place by Trump earlier this year.
CEO Elliott Hill told investors in September that new levies on imports from China, as well as other U.S. trading partners, will likely add about $1 billion to Nike's overall cost base.
On the more defensive end of the consumer sector, General Mills' second-quarter update, published Wednesday, showed stronger-than-expected overall sales of $4.9 billion.
But the overall total was down 7% from last year and reflected what CEO Jeff Harmening described as "significant economic pressure" for "lower- and middle-income consumers."
In the moribund housing sector, interest-rate and cost issues were underscored by Lennar's fiscal fourth-quarter earnings, published late Tuesday. The home builder's projections for signed contracts over the three months ending in February, its fiscal first-quarter, missed Wall Street's forecasts, and its stock was marked 3.6% lower in early Wednesday trading.
CEO Stuart Miller described the housing market as "constrained by affordability challenges, as well as weak consumer confidence."
The message from corporate America, at least at the moment, feels a lot more guarded than the view from Wall Street, which expects another run of double-digit earnings and stock-market advances by the end of 2026.
But, as the great Yogi Berra also cautioned: "If you don't know where you're going, you might wind up someplace else."
Right now, corporate bosses and corporate investors seem heading in different directions.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 17, 2025 11:29 ET (16:29 GMT)
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