With the US fourth-quarter earnings season nearly halfway through, the financial sector is concerned about tightening consumer credit. Companies that make shoes and clothes have said retailers, still grappling with inflation-hit shoppers, are reluctant to buy their products. Others announce cost cuts and layoffs.
But big technology is saving them all.
On Jan. 19, about a week into the fourth-quarter earnings season, earnings per share of S&P 500 companies fell 1.8% overall, according to a FactSet report on Friday. But on Friday, after results came in from Meta Platforms Inc. META,
Amazon.com Inc. AMZN,
Microsoft Corp., Alphabet Inc. GOOGL
GOOG
and Apple Inc.: Quarterly earnings rose 1.6%.
In the report, John Butters, senior earnings analyst at FactSet, said the slower start to the earnings season was due to the number of banks and other financial companies reporting.
“At the time, nearly half (46%) of companies reporting fourth-quarter actual results were in the financial sector. Companies in the financial sector, especially banking, are responsible for most of this below-average performance compared to estimates,” he said.
Between Dec. 31 and Jan. 19, the earnings decline for the financial sector rose to 19.2%, the report says, but information technology companies – FactSet puts companies like Microsoft MSFT,
Apple AAPL
and Intel INTC
in that category – played the biggest role in the overall rebound.
Consistent with last year, demand for artificial intelligence and the technology’s long-term potential drove tech sector results.
This week in earnings
According to FactSet, of the S&P 500 companies, 46% reported quarterly results this earnings season. For next week, the firm said, 104 S&P 500 companies will release results, including four from the Dow. Among them is meat producer Tyson Foods Inc. TSN.
AI and analytics software company Palantir Technologies Inc. PLTR
also reports, as some analysts question whether its stock price justifies the near-term financial benefits of AI.
Spotify audio streaming platform SPOT technology
will also release its findings, after announcing a new multi-year deal with podcast host Joe Rogan. Earnings from Mattel Inc. MAT
are on the way, as the toymaker looks at life after the “Barbie” movie. PayPal Holdings Inc. PYPL
releases earnings as analysts determine the impact of a large round of layoffs planned at the company.
Other companies expected to report: PepsiCo Inc. PEP,
Canopy Growth Corp. T&C,
Ford Motor Co., F,
Chipotle Mexican Grill Inc. CMG,
Snap Inc. SNAP
and Uber Technologies Inc. UBER.
Calls to put on the diary
McDonald’s and the boycotts: After Hamas’ raid on Israel in October and Israel’s bombing of Gaza, McDonald’s Corp. tried to avoid taking sides. It didn’t exactly work.
Calls for a boycott arose after McDonald’s MCD
restaurants in Israel have given out free meals to that nation’s soldiers, and Chief Executive Chris Kempczinski last month said the war and “associated misinformation” had weighed on the burger chain’s business. When McDonald’s reports quarterly results on Monday, executives may provide more details on the overall impact, following Starbucks Corp.’s SBUX.
said the conflict, and similar consumer resistance related to it, have hurt its own sales abroad and in the U.S.
McDonald’s also reports that some Wall Street analysts are struggling to find the next big thing to drive its shares higher. And even if they expect fast food to get cheaper this year, they may still be more expensive than they have been historically.
Spirit Airlines: When a federal judge blocked the merger deal between JetBlue Airways Corp. and Spirit Airlines Inc. last month, the airlines appealed. So, JetBlue JBLU
warned that the agreement may need to be terminated, but that it remains “in force”. Now, as questions pile up about Spirit’s chances as a potential standalone carrier, we’ll hear more from the ultra-discount airline — about price-cutting competition, travel trends and efforts to consolidate its finances — when it reports quarterly results Thursday. .
The numbers to keep an eye on
Disney streaming results: Walt Disney Co. will report results on Wednesday, and investor enthusiasm isn’t great. Shares of the amusement and multimedia park giant have fallen 12% in the last 12 months. He is battling with activist investors pushing for stronger profit margins and is battling in court with Florida Gov. Ron DeSantis. And more importantly to some analysts, its streaming business – which includes Disney+, Hulu and ESPN+ – is losing money.
Disney said it expects its streaming business to turn a profit in the fourth quarter of this fiscal year, which is expected to end around the end of September. But after expanding over the previous decade, the streaming industry is consolidating as it tries to find a way to make more money. And rival Netflix Inc.’s NFLX
the most recent quarter showed signs of recovery.