CEO Uncertainty Remains High Even as Q1 Earnings Season Ends Better-Than-Expected

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Dow Jones Industrial Average,Ross Stores Inc,Walmart Inc

Stocks Analysis by Christine Short covering: S&P 500, Dow Jones Industrial Average, Ross Stores Inc, Walmart Inc. Read Christine Short's latest article on Investing.com

The post-peak LERI reading came in at 157, showing US CEO uncertainty remains highThis week 1,739 companies are expected to report earningswith an 8-day winning streak, due to a combination of better-than-expected earnings and the belief that interest rate cuts are still in play this year. That sentiment was further promoted on Thursday when weekly jobless claims came in at 231k for the week ending May 4, the highest reading since August.

Despite signs that inflation may be starting to cool, the University of Michigan Consumer Sentiment Index published Friday showed that higher prices remained a top concern of US shoppers in May. The initial reading for the month came in at 67.4, down significantly from 77.2 in April. Expectations for inflation were also higher with the one-year inflation outlook increasing 0.3 percentage points MoM to 3.5%, the highest level since November 2023.

The official post-peak season LERI reading for Q1 stands at 157, well above the baseline reading, suggesting companies are feeling less certain about economic conditions than they were at the beginning of the year. As of May 10, there were 107 late outliers and 62 early outliers.​This week begins what’s often referred to as the retail earnings parade portion of the reporting season. We’ll get a good read on what the US consumer has been up to, and if they’re still hanging in there.

Whether or not this later-than-usual date is indicative of “bad news” to come on the upcoming call, or just the continued transition to a new fiscal calendar, is unknown at this time. However, expectations for this name have been better. According to FactSet, FQ4 EPS for UA is anticipated to show a YoY decline of 56%, while revenues are expected to fall 5%.

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