As of Friday's market close, the momentum of the US December quarter earnings rebound persists, with over two-thirds of S&P 500 companies having already reported, exceeding initial expectations. The earnings landscape has proven to be more resilient than anticipated, showcasing a positive trend for investors.
A substantial 335 companies within the S&P 500 index have unveiled their quarterly results, with the remaining slated to disclose in the upcoming weeks. Among the highly anticipated reports are those of retail giant Walmart, scheduled for February 20, and semiconductor powerhouse Nvidia, set for February 21. Of the two, Nvidia's impending report looms large, especially considering its staggering 49% surge in share value since the beginning of 2024, while Walmart has seen a more modest 6% increase.
Week 7 of the earnings season witnesses a flurry of smaller companies unveiling their financial performance, spearheaded by beverage titan Coca-Cola and technology stalwart Cisco, the latter reportedly poised to announce significant job cuts numbering in the thousands, as per Reuters. FactSet, a leading US financial data company, notes the overall positive trajectory of the S&P 500 companies relative to earnings estimates, underscoring an improvement compared to previous weeks.
According to FactSet's analysis, the percentage of S&P 500 companies surpassing earnings projections has now exceeded the 10-year average, despite the magnitude of earnings surprises still lagging behind historical averages. Nevertheless, both metrics show improvement compared to the previous week. Overall, 67% of S&P 500 companies have disclosed their actual results for Q4 2023, with 75% reporting actual earnings per share (EPS) above estimates, albeit slightly below the 5-year average.
Aggregate earnings have also outperformed estimates, albeit modestly, standing at 3.8% above projections. This figure falls short of the 5-year and 10-year averages but demonstrates an uptick from the previous week. Notably, the earnings improvement appears broadly distributed across seven of the market's 11 sectors, with Communication Services, Consumer Discretionary, Utilities, and Information Technology sectors leading the way in year-over-year earnings growth.
Conversely, four sectors, including Energy, Materials, Health Care, and Financials, have reported year-over-year declines in earnings, attributed in part to rising interest rates and narrowing net interest margins.
This week's roster of US and global companies reporting includes Occidental Petroleum, along with mining firms Albemarle, Agnico Eagle, and Barrick Gold. Additional reports are anticipated from companies such as Swiss Re, Kraft Heinz, Marriott, Moody’s, Pernod Ricard, Singtel, and Nippon Paint, the parent company of Dulux in Australia, among others.
With the ongoing influx of earnings reports shaping market sentiment, investors remain vigilant for further insights into the health of corporate America and its global counterparts. As the earnings season unfolds, the resilience displayed by companies across various sectors offers optimism for continued economic recovery and market stability in the months ahead.