Investors are hungry for gains amid fears of growth Reuters

Caroline Valletkevich

NEW YORK (Reuters)-Investors are paying attention to the upcoming quarterly results of US companies and their forecasts for recovery in the second half of 2021, as some people worry that the recent economic surge has abated.

Fearing that economic growth might slow in the second half of the year, US Treasury bonds rose sharply this week, pushing yields to their lowest level since February. In the stock market, financial stocks, energy stocks and other so-called value stocks related to the recovery have sold off.

The substantial increase in earnings in the second quarter is expected to mark the peak of US earnings growth and recovery from the profit collapse caused by the pandemic last year. According to Refinitiv’s IBES data, revenue is estimated to increase by 65.8% over the same period last year.

According to Refinitiv’s IBES data, this is expected to be the largest percentage increase since the financial crisis in the fourth quarter of 2009.

Starting from Tuesday, JP Morgan Chase (NYSE:), Goldman Sachs (NYSE:), Bank of America (NYSE:) and other major banks will release earnings reports and start quarterly results season. They can provide early clues about the economy and growth-related stocks.

Even if trading revenue declines and revenue stagnates due to low interest rates and weak demand, the quarterly profits of most major U.S. banks are expected to rebound sharply.

Investors are also eager to evaluate whether earnings will support Wall Street’s rise. The S&P 500 has risen about 16% so far this year. Many market observers said that the expected surge in earnings this year is an important reason for the strong market performance.

However, this week’s report that the number of initial jobless claims in the United States was weaker than expected and the spread of the delta coronavirus mutation has increased investors’ doubts about the reopening of the economy.

“In this earnings season, what investors want to see and what we expect is that the earnings trend in terms of value remains intact, to support (the view) it is too early to leave this transaction. This will begin next week for the bank,” Truist According to Keith Lerner, chief market strategist at Advisory Services.

Many investors, including Lerner, are still optimistic about economically sensitive industries such as energy, finance, and industry, which are regarded as value transactions due to years of poor performance. The S&P 500 Value Index fell this week. During the same period, the Standard & Poor’s 500 Index (known for companies with upward momentum behind it) rose, reflecting the decline in benchmark 10-year Treasury bond yields, which pushed up technology stocks.

Gary Bradshaw, portfolio manager of Dallas Hodges Capital Management in Texas, likes energy, materials, restaurants, and some retailers. He said that although not all companies are in perfect condition, the earnings season should confirm The strong momentum of the economy.

“Not 100% optimistic,” he said, but “we expect earnings to be very strong, so we are optimistic about the market.”

According to data from Refinitiv, the industrial, consumer discretionary, energy and materials industries are expected to have the largest year-on-year profit growth, and industrial stocks are expected to grow by more than 500%.

Nicholas Colas, co-founder of DataTrek Research, wrote in a report this week that second-quarter earnings expectations may still be too low.

He writes, therefore, as we obtain the second quarter financial report, the overall estimate for 2021 and 2022 “should continue to increase”, which may give investors more confidence that earnings should support the market next year.

The company’s senior global market strategist Sameer Samana (Sameer Samana) said that it is also worth paying attention to what the company is taking to communicate the increase in raw material prices that they may be struggling to deal with. FuGuo bank (New York Stock Exchange:) Investment Research Institute. Signs of these pressures have appeared in economic data in recent months.

Other companies that will release reports next week include Delta Air Lines (NYSE:), UnitedHealth Group (NYSE:) and Kansas City Southern (NYSE:).