Big Banks Earnings In Focus for S&P 500 This Week

This week marks the commencement of the earnings season, with prominent banks and financial institutions, including JPMorgan Chase (NYSE: JPM), Wells Fargo (NYSE: WFC), Citigroup (NYSE: C), BlackRock (NYSE: BLK), and PNC Financial Services (NYSE: PNC), set to release their reports.

A prevailing sense of pessimism encompasses the corporate landscape regarding earnings expectations. FactSet’s research indicates a notable trend, where out of the 116 S&P 500 companies that have provided earnings guidance, 74 have projected negative outlooks, while a mere 42 are optimistic about their financial performance.

The scenario is unprecedented, with the number of companies offering guidance reaching an all-time high of 116, a figure unmatched since FactSet initiated this type of tracking in 2006. The previous record, set just last quarter, saw 113 companies issuing their earnings expectations.

Amazon Prime all set to begin 

Beginning Tuesday, Amazon (NASDAQ: AMZN) is set to roll out its "Prime Big Deal Days" for its esteemed Prime members. The shopping extravaganza, spanning two days, will be available in 19 countries, including the U.S. Members are in for a treat with enticing deals and substantial discounts on renowned brands such as Peloton, LG, Sony, iRobot, SharkNinja, and Barbie, to name a few. 

The much-anticipated event was unveiled in August and is scheduled a mere three months post Prime Day 2023, which marked Amazon's pinnacle of success in the history of Prime Days. A record-breaking 375 million products were purchased globally during the event, translating to a whopping $2.5 billion saved on deals and discounts, as reported by Amazon. Notably, the inaugural day of this year's Prime Day event set a new benchmark as Amazon’s highest-grossing sales day ever.

Employment data remains strong in the U.S.

The U.S. economy is on an upswing, boasting the creation of over 2.3 million jobs this year, a sub-4% unemployment rate, and nearly 10 million job vacancies awaiting applicants. Yet, with such promising employment statistics that typically signify economic prosperity, why does a considerable segment of the population harbor a grim outlook on the economic landscape?

The culprit is the incessant rise in the cost of living. From skyrocketing rents to the escalating prices of food, fuel, and household appliances, inflation is the invisible hand eroding the public’s economic optimism. Although the yearly inflation rate is on a downtrend, the persistent elevation in prices is a financial strain that many find intolerable. This inflationary pressure casts a shadow on the otherwise positive economic indicators, making the financial wellbeing of many feel precarious, if not dire. 

The Bureau of Labor Statistics (BLS) is set to release the September Producer Price Index (PPI) on Wednesday, offering a glimpse into inflation from the perspective of manufacturers and wholesalers. The PPI is often considered a precursor to consumer price trends, as the costs incurred by manufacturers typically trickle down to the consumer.

On Thursday, attention will shift to the release of the latest Consumer Price Index (CPI). According to forecasts by the Federal Reserve Bank of Cleveland, consumer prices are estimated to have increased by 0.4% in the past month and 3.7% year-over-year. When excluding the often fluctuating food and energy costs, the core prices are expected to reflect a similar 0.4% rise from August and a 4.2% increase year-over-year.

If these projections hold true, it would represent the most modest annual growth since September 2021, indicating a possible easing in the inflationary pressures that have been a point of concern for both consumers and policymakers alike.

Related: Will the U.S. Economy Avoid a Recession Next Year?