The outlook for jobs and spending may be chief among concerns for investors heading into third-quarter U.S. earnings as expectations increase that the Federal Reserve will need to keep an aggressive approach to hiking interest rates.
Stocks have struggled recently, with the S&P 500 falling for a sixth straight session Wednesday, partly because of mounting fears among investors that the aggressive stance by the Fed could tip the world’s largest economy into recession and raise unemployment rates. Stocks rebounded Thursday. Given the interest rate outlook, investors are keen to hear what company executives say about their plans for hiring and investment spending, which would give strong clues about the health of the U.S. economy.
Earlier this week, Bloomberg News reported chipmaker Intel Corp is planning a major reduction in headcount in the face of a slowdown in the personal computer market, citing people with knowledge of the situation. Nike Inc in its recent report warned of a margin squeeze from widespread markdowns, creating worries of sector-wide contagion of ballooning inventory.
Earnings estimates have come down for all of 2022 as well, with S&P 500 profit growth now forecast at 7.4% compared with 9.5% at the start of July, based on Refinitiv data.
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