JPMorgan will report its first-quarter earnings on Wednesday to start the US season. Banks are set for a hit from a slowdown in corporate dealmaking, while energy is poised to rebound on the back of a surge in crude prices.
Wall Street trimmed its expectations heading into the quarter, but corporate America is expected to push through its “last big beat for a while”, said analysts at Bank of America.
The S&P is expected to report “blended” growth — a mix of actual and expected earnings per share — of . per cent in the first quarter from a year ago, data provider FactSet shows.
Difficult year-ago comparisons and a number of macroeconomics disruptions, including inflation and supply chain bottlenecks, have been blamed for what could be the slowest EPS growth rate since the fourth quarter of .
However, American blue-chip companies often overcome grim initial estimates and, based on the average beat rate over the past five years, FactSet expects earnings could rise . per cent in the first three months of the year. That would mark the fifth consecutive quarter of earnings growth above per cent.
Revenues are projected to rise . per cent, led by the energy, materials and real estate sectors.
Energy is expected to lead the S&P sectors as surging oil prices boost revenue and earnings. The energy sector is expected to report earnings growth of . per cent while revenue is forecast to rise nearly per cent compared with a year earlier, bolstered by a per cent rise in crude prices.
Oil prices have been volatile following the invasion of Ukraine on February . Brent crude, the international oil benchmark, surged to nearly $ a barrel last month, only to give up some of those gains after the US said it would release emergency reserves. More Covid- lockdowns in China have raised the prospect of weakening oil demand.
The financial sector is expected to report an earnings decline of . per cent, driven by banks, where analysts have pencilled in a per cent drop in EPS.
Banks are forecast to report a slowdown in investment banking revenue, after stimulus measures and markets supported a rise in M&A activities and initial public offerings last year. John Butters at FactSet noted that banks are estimated to report higher provisions for loan losses, which will drag on growth.
Inflation is expected to be a headwind for companies in the first quarter of fiscal . Of the S&P companies that have reported results, FactSet said nearly two-thirds had cited labour costs and shortages as weighing down on results. Pandemic-related expenses and supply chain disruptions were also mentioned as negative contributors.
However, companies continue to raise prices to offset inflationary cost pressures. Many large consumer groups have passed along higher input costs to consumers through price increases on their products in the fourth quarter of .
Investors will tune into any management commentary about the impact of the war in Ukraine, which could fuel inflationary pressures. FactSet noted that of the S&P companies that have reported results mentioned Ukraine, but only five said the war has hurt their business.
