Lots of big things have happened over first, second and third quarters of this year: persistent inflation, higher interest rates from the Federal Reserve, the return of student-loan payments, fluctuating recession anxieties, relentless prophesizing over AI and a tech-stock explosion that helped carry the S&P 500 Index SPX higher.
Third-quarter per-share profit is set to fall 0.3% for the 500 companies in the S&P 500 Index collectively, according to FactSet. That would mark the fourth straight quarter of declines. While the index is up 12.2% so far this year, it retreated in August, largely amid concerns about sustained higher borrowing costs.
Earlier this year, AI ambitions boosted stocks like Nvidia Corp. NVDA, +2.40% and Microsoft Corp. MSFT, +2.47% — companies that are big enough to move the broader markets on their own. But some Wall Street analysts have started to poke around at the costs of big tech’s AI investments, and the short-term impact on profits.
“It is very hard to see how the Fed and economy will thread this needle,” he continued, “and we believe that markets expect everything to fall into place when it comes to inflation, the economy and rates, and that is a very high bar.” The calls to put on your calendar Big bank earnings: Higher interest rates can be a double-edged sword for banks. One one hand, they boost the income banks take in on loans. On the other, they discourage customers from taking out the loans that banks depend on to make money.