The S&P 500 is on track for surprising earnings growth, and Disney awaits on deck


Sizable earnings from Big Tech and the big banks are likely to drive a surprising rise in corporate earnings this earnings season. Companies in the S&P 500 SPX Index, + 0.39% are projected to show positive earnings growth of 1.7% for the fourth quarter, with 58% results already available. That would allow the index to emerge from an earnings recession, which exists when companies’ earnings decline year-over-year for two or more quarters in a row.

At the end of last year, analysts had expected December quarter earnings to fall 9.3%, which would have marked the fourth consecutive quarter of year-on-year declines. The overall projections began to slowly improve as more results came in and finally turned positive this week. Large gains in the financial services, information technology and communications sectors helped drive momentum. Since the S&P 500 is weighted by market value, larger companies have a greater impact on the index’s overall earnings trajectory. The financials sector has been the largest contributor to the earnings surge, according to FactSet senior earnings analyst John Butters. The combined growth rate for the sector, which combines actual and projected results depending on whether a company has reported earnings, now stands at a positive 17.2%, while expectations were for a 9.4% decrease as of May 13. December. Companies that had significant impacts include JPMorgan Chase & Co. JPM, -0.20%, which exceeded earnings expectations by 44%, while Goldman Sachs Group Inc. GS, -0.09% exceeded by 62%, Citigroup Inc. C, + 0.27% exceeded 55%, Morgan Stanley MS, + 1.29% exceeded 48%, and Capital One Financial Corp. COF, + 1.62% exceeded estimates by 87% In In the information technology sector, big earnings outperform Apple Inc. AAPL, -0.31%, Intel Corp. INTC, -1.04%, and Microsoft Corp. MSFT, + 0.08% have helped drive growth rate combined sector to 15.6% from an expectation of 1.5% in December. Alphabet Inc. GOOG, + 1.73% GOOGL, + 1.71% and Facebook Inc. FB, + 0.60% also beat expectations by a wide margin, raising the combined growth rate for the communications services sector to a positive 6% in compared to a projected 12.9% decreased as of December 31. Outside of those three sectors, Inc. AMZN, + 0.63%, and Ford Motor Co. F, + 1.23% also delivered big earnings surprises that Butters said contributed significantly to the combined earnings increase. growth rate. Boeing Co. BA, -1.29% has been the biggest drag, as the company reported an adjusted loss of $ 15.25 per share, while analysts expected a loss of $ 1.78 per share. Without Boeing’s results, the S&P 500’s combined growth rate would be more than double what it is now, Butters wrote. In all, 81% of companies that have delivered results so far made better-than-expected profits, he said. Next week features another busy earnings schedule, with 77 members of the S&P 500 set to report, including three companies that are also on the Dow Jones Industrial Average. Walt Disney Co. DIS, + 0.52% and Cisco Systems Inc. CSCO, + 1.76% are among the top names due to publication numbers. Here’s what to watch out for: The Disney Streamline is expected to post another quarter in the red Thursday afternoon as the pandemic continues to weigh on its theme park and media businesses, but investors seem willing to look. beyond the company’s earnings performance impacted by the pandemic. , according to LightShed Partners analyst Richard Greenfield. A key interest in Disney’s report will be the company’s progress with its Disney + streaming service. Disney continues to grow its subscriber base at a rapid pace, but after the company’s latest report, there was some concern about how much of that growth came from those who subscribed to the company’s Indian Hotstar product, through which Disney generates a much lower average revenue per user. Disney earnings preview: Can Disney + keep up its breakneck pace to sustain the Magic Kingdom? A new chapter for Twitter Twitter Inc. TWTR, + 0.48% probably benefited from the same strong ad trends that helped the companies Pinterest Inc. PINS, + 5.29% and Facebook late last year, but those results are not that important like the ones that follow. Twitter executives will likely face questions Tuesday afternoon about user engagement trends following the decision to permanently ban former President Donald Trump from the platform due to his role in inciting January violence on Capitol Hill. US “Regardless of your opinion of the recent political actions of the president or Twitter, we see Trump as a unique force animating activity and engagement on the platform that will not be easily replaced,” the Wells analyst wrote. Fargo Brian Fitzgerald after the ban was announced. Bernstein analyst Mark Shmulik hypothesized that while Twitter’s engagement could be affected, the ban could result in an “increase in the inventory of brand-safe ads,” as some advertisers did not want that Your ads will appear near Trump-related content before the ban. Opinion: Apple’s privacy changes are affecting more than just Facebook Networking The IT spending landscape appears to be improving, which Evercore ISI analyst Amit Daryanani said could yield slightly better results than expected for Cisco when the company will release the results Tuesday afternoon. You will seek information on the vision of the new CFO R. Scott Herren, as well as the progress of the company’s efforts to generate more subscription revenue. Rideshare recovery? Lyft Inc. LYFT, + 2.61% and Uber Technologies Inc. UBER, + 1.26% likely continued on their difficult road to recovery in the fourth quarter, but Shmulik cautioned that the company’s growth rate for the period could be flat or even a little lower. the third quarter rate, given the increase in global cases, the emergence of new strains of COVID-19 and the winter weather. Read: Uber’s growing and ‘exciting’ delivery business and potential rides recovery make analysts optimistic with reports from Lyft Tuesday afternoon, while Uber follows a day later. Uber executives will likely discuss the company’s recently announced decision to buy Drizly, an alcohol delivery service.