Why the stock market is having 'digestion problems' this earnings season

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Earnings Per Share News

Evercore ISI,Julian Emanuel,Earnings Season

After a strong market rally to start 2024, investors haven't been impressed by corporate earnings so far this season, even when they've been solid.

in April as rising bond yields and slimmed expectations for Federal Reserve interest rate cuts have put a damper on investors' enthusiasm.

This has broadly been seen across stock reactions in the day following the release of quarterly results for the 65 S&P 500 companies that have reported results so far this season. Stocks that top Wall Street's estimates have risen 0.8% in the next trading session, slightly lower than the 0.9% average seen over the last few years, per Emanuel's research.

"Markets have priced in a higher probability of the Goldilocks scenario playing out this year, introducing more downside risk to 'good but not good enough' news," Chronert wrote in a note to clients on the day JPMorgan reported earnings. "While very early, the first set of 1Q reports from the banks highlights this risk of guidance falling short of lofty implied growth expectations, even as the overall fundamental picture remains healthy.

Given the market's recent jitteriness around rising yields and the lack of hope around Fed rate cuts, the performance of these companies will be "pivotal" for the market's direction moving forward, SoFi head of investment strategy Liz YoungIf You’d Invested $5,000 in Brookfield Renewable Partners Stock in 2023, This Is How Much You Would Have TodayLONDON, April 22, 2024--Barclays today announces the appointment of Stephen Pick as Head of M&A for EMEA; Pier Luigi Colizzi as...

Wall Street's main indexes rose on Monday after steep losses in the previous session as easing Middle East tensions buoyed risk appetite, while investors looked ahead to an action-packed week with major tech earnings and a key inflation print. The Nasdaq and the S&P 500 ended lower on Friday as Netflix shares weighed after a dour quarterly earnings report, with both the indexes suffering six straight sessions of declines last week, their longest since October 2022.

 

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