forbes.com
S&P 500 Q2 Earnings Begin: Banks in Focus Amidst Tariff Concerns
The second-quarter earnings season begins this week for 39 S&P 500 companies, with initial blended earnings growth at 4.8%, influenced by factors such as JPMorgan Chase's prior-year gains and Warner Bros. Discovery's past losses. Upcoming economic data and potential tariffs present significant risks.
- What is the overall outlook for S&P 500 second-quarter earnings, and what are the key factors influencing this outlook?
- The second-quarter earnings season for 39 S&P 500 companies starts this week, with a focus on major banks. Initial blended earnings growth is 4.8% year-over-year, slightly below expectations, while 2025 and 2026 growth are projected at 9% and 14%, respectively. Key companies reporting include JPMorgan Chase, Bank of America, and others.
- What are the potential economic and market consequences of the upcoming CPI and retail sales data, and the looming threat of new tariffs?
- The US dollar's weakening could boost international earnings for S&P 500 companies, given that 41% of their sales originate internationally. The upcoming CPI and retail sales data, expected to show increases and a rebound respectively, will significantly influence economic growth expectations. New tariffs, scheduled for August 1st unless a trade deal is reached, pose a significant risk.
- How do individual company performances, like those of JPMorgan Chase and Warner Bros. Discovery, disproportionately affect sector-level earnings growth?
- JPMorgan Chase's results will heavily influence the financial sector's performance due to prior year's Visa stock sale gains. Excluding JPMorgan, financial sector growth improves to 9.3%, highlighting the impact of exceptional prior-year results. Similarly, Warner Bros. Discovery's past losses skew the communication services sector's growth; excluding it reduces the growth to 8.2%.
Cognitive Concepts
Framing Bias
The positive framing is evident in the headline suggesting a positive start to the earnings season, and the emphasis placed on the strong performance of the Magnificent 7. The article also highlights positive growth predictions for 2025 and 2026, potentially downplaying short-term concerns.
Language Bias
The language used is generally neutral; however, descriptions such as "deceptively low" (regarding financial sector earnings) and "hotter" (regarding CPI) inject some subjective tone. The repeated use of terms like "Magnificent 7" creates a positive connotation around these companies. Neutral alternatives could include "leading tech companies" for Magnificent 7 and "below expectations" instead of "deceptively low.
Bias by Omission
The article focuses heavily on the financial sector and the "Magnificent 7," potentially omitting relevant information from other sectors that could provide a more balanced view of the earnings season. The analysis also lacks discussion of potential negative impacts of a weakening dollar on certain companies.
False Dichotomy
The article presents a somewhat simplified view of the relationship between the US dollar's weakening and international earnings, neglecting potential complexities such as varying impacts across different sectors and regions. It also presents a somewhat simplified picture of the relationship between retail sales and economic growth.
Sustainable Development Goals
The article discusses the second-quarter earnings season for several major companies, indicating economic activity and growth. Positive earnings growth forecasts suggest a healthy economy and job creation, contributing positively to decent work and economic growth. The focus on revenue growth and consumer spending further supports this connection.