Q2 earnings growth expected to reach two-year high, with positive outlook for individual stock.

From Nasdaq: 2024-07-12 18:15:00

The quarterly releases from JPMorgan, Citigroup, and Wells Fargo beat expectations, but the market is underwhelmed due to moderating economic activities and elevated interest rates. Stock outperformance coming into the reporting cycle also influenced the market’s reaction. Citigroup’s outperformance is based on market confidence in restructuring efforts rather than short-term profitability outlook.

In the core banking business, profitability is constrained by margin pressures and soft credit demand, with some credit quality deterioration. Trading revenues are strong, and the investment banking business is showing signs of growth. Q2 earnings for Finance companies are up +0.2% from last year on +11.5% higher revenues, with expectations for total sector earnings to be up +10.8%.

Total S&P 500 earnings are expected to be up +8.5% from last year, with Q2 on track to set a new all-time quarterly record in aggregate earnings. Total annual S&P 500 earnings are expected to be up +8.9% with +1.6% revenue growth. Excluding Finance, the expected revenue growth improves to +3.8%.

Q2 earnings growth is the highest since 2022 Q1, with aggregate earnings on track to set a new all-time quarterly record. Total Q2 earnings are expected to be up +8.5% on +4.7% higher revenues. There have been favorable revisions trend ahead of the Q2 earnings season, with S&P 500 index estimates holding up better.



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