Wall Street is heading into a defining fortnight as the Q3 earnings season takes centre stage, with JPMorgan and the big US banks set to open the reporting season on 13 October. The setup is unusually favourable: analysts expect S&P 500 earnings to rise 24.6% from a year ago, which would mark the eighth straight quarter of double-digit earnings growth for the index.
Q3 earnings season: eighth straight quarter of double-digit growth
According to Zacks Investment Research, the earnings picture heading into the reporting season is broad-based. Earnings are expected to be above last year’s level in 15 of the 16 Zacks sectors, with six sectors — Aerospace, Energy, Tech, Basic Materials, Transportation and Industrial Products — on track for double-digit growth. The Tech sector alone is expected to post earnings growth of 43.3%.
The AI-driven chip trade remains the engine room. Nvidia’s third-quarter earnings are expected to increase 90% year over year on 91.2% higher revenues, while Alphabet is expected to post earnings growth of 2.8% after an outsized gain in the prior period.
Markets hold near records despite rising yields
The S&P 500 closed at 7,722.72 on Friday, up 0.73% on the session and just 1.0% below its 13 August record high, while the Nasdaq Composite touched a new intraday record.
FAKTA
- The Q3 earnings season gets underway in earnest on 13 October, when the big US banks — starting with JPMorgan — report.
- S&P 500 earnings are expected to rise 24.6% year over year, the eighth straight quarter of double-digit growth.
- Nvidia’s Q3 earnings are expected to jump 90% on 91.2% higher revenues; the Tech sector is expected to grow 43.3%.
- The S&P 500 closed Friday at 7,722.72, about 1% below its 13 August record, while the Nasdaq hit a new intraday high.
- Soft September payrolls (29,000 vs ~90,000 expected) cut expectations of another Fed rate hike in late October.
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Conclusion
With earnings estimates rising across most sectors, the market near record highs and the Fed likely on hold, the bar for the Q3 earnings season is set high but the foundation looks solid. The big banks’ reports from 13 October will show whether corporate America can clear a lowered bar — and whether the earnings momentum that has carried Wall Street all year still has room to run.
