US inventory market: This autumn earnings season preview

Investing.com — UBS forecasts the S&P 500 to see an 8.4% year-over-year enhance in earnings per share (EPS) for the fourth quarter of 2024.

Regardless of showing slower than the expansion seen in earlier quarters, UBS expects ultimate figures to align nearer to 12%, supported by historic traits of upward revisions. A comparable sample was noticed in Q3, the place EPS progress ended at 8.9%, far exceeding the preliminary 4% estimate.

“Earnings estimates observe a predictable sample: they begin too excessive, are adjusted decrease heading into reporting season, and are topped by precise outcomes,” UBS strategists led by Jonathan Golub mentioned in a word.

“Over the previous 2 months, 4Q estimates have remained flat, defying the conventional downward development. Nonetheless, this latest energy is fully attributable to tech-related firms,” they added.

The expertise sector continues to dominate earnings progress, with TECH+ anticipated to rise 20.4%, in comparison with simply 2.5% for non-tech sectors.

Nonetheless, consensus EPS progress forecasts for tech firms are various, UBS factors out. For example, Nvidia (NASDAQ:NVDA) is projected to see its earnings surge by 62%, adopted by Amazon (NASDAQ:AMZN) at 52.6%, and Alphabet (NASDAQ:GOOGL) at 26.1%.

On the identical time, different tech giants, equivalent to Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL), are forecasted to ship extra average progress of 6.9% and 11.6%, respectively.

TECH+ performs a dominant function in driving This autumn progress, accounting for seven of the highest ten contributors and including 5.2% to the general S&P 500 EPS enhance as a bunch.

However, Vitality stays a drag on general efficiency, with EPS anticipated to contract by 27.5%. This sector has persistently weighed on earnings all through 2024 on account of ongoing challenges.

In the meantime, financials are set to ship strong progress of 17.8%, largely attributed to the most important funding banks, equivalent to Financial institution of America Corp (NYSE:BAC), JPMorgan Chase (NYSE:JPM), and Morgan Stanley (NYSE:MS), which profit from prior-period costs.

“On a median foundation, Financials are anticipated to be the quickest rising group, outpacing TECH+ (10.5% vs. 8.5%),” UBS highlights.

Apparently, revisions to This autumn earnings estimates have been much less unfavorable than normal, with energy concentrated in tech-related firms. Over the previous two months, estimates have remained flat, defying the everyday downward changes seen forward of reporting season.

UBS factors out that early reporters—20 firms with off-cycle quarter ends—have exceeded expectations by 4.3%, barely under the long-term common of 4.8%, although considerably weaker than in latest quarters.