“The sell-offs took place in the two days before the bellwether financials reported,” said Richard Nackenson, an equity market portfolio manager with the asset manager Neuberger Berman. “They took place in the absence of facts, actual earnings and forward-looking statements. So we’re now starting to replace unknown concerns with real evidence.”
The outlook for banks — which have been significant beneficiaries of the Trump administration’s tax overhaul — is strong. Once the third-quarter numbers are in, financial-sector earnings are expected to rise 41 percent, according to numbers from Refinitiv.
Another sector where earnings are set to rise significantly is energy. Oil prices have jumped more than 40 percent in the last year, and companies are expected to say profits have more than doubled from a year ago.
It won’t be as rosy for industrial companies, which include large exporters like Boeing. Already some manufacturers have noted that their profit margins have been hurt by rising costs. Investors will be eager to hear any guidance about the impact of the trade war between the United States and China because tariffs on imports from the two countries took effect mostly during the third quarter.
The relations between the countries are also a primary concern for investors in large technology companies. Chip-maker stocks have been hit particularly hard by the rise in tensions, as their manufacturing base in Asia risks disruption. The Philadelphia semiconductor index is down more than 8 percent this month.
As always, what executives have to say about the state of their business and the outlook in the months head could also be a decisive factor for stock investors. Even as his bank reported results that were better than expected, JPMorgan Chase’s chief executive, Jamie Dimon, sounded a warning about the long-term impact of rising “economic and geopolitical uncertainties.”
In a conference call with reporters on Friday, he rattled off a list of worrisome events around the world, including weakness in the Turkish and Argentine economies, political trouble in Italy and Saudi Arabia, the Trump administration’s trade tariffs, Britain’s pending exit from the European Union and the Federal Reserve’s reversal of quantitative easing.
“It just seems to be deteriorating a little bit, that’s it,” Mr. Dimon said. “I’m just pointing it out.”
Emily Flitter contributed reporting.
Article source: https://www.nytimes.com/2018/10/14/business/economy/stock-market-earnings-season.html?partner=rss&emc=rss
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