Welcome, Guest Sign InSign Up
This column popular content

Earnings season is here to distract investors from everything else

Details of the Earnings season is here to distract investors from everything else

By Julia Horowitz, CNN Business

Updated: Fri, 14 Jan 2022 13:05:37 GMT

Source: CNN Business

Tech stocks have been plunging as Wall Street obsesses over the Federal Reserve's next moves and how aggressively it will hike borrowing costs over the next 12 months to rein in inflation.

But attention could soon shift elsewhere as corporate earnings season arrives, delivering a distraction from the economy and the unknowns that lie ahead.

What's happening: S&P 500 earnings are expected to have increased by 22.4% compared to the previous year during the final three months of 2021, according to Refinitiv. That would be a strong showing.

In a note to clients on Friday, UBS said that despite a volatile start to the year, it does not think a more hawkish Fed will "derail" the stock market rally, and that earnings season will "turn investor attention back to robust fundamentals."

This just in: Delta Air Lines said on Thursday that its profits beat expectations during the last three months of 2021. While it expects to lose money in its current quarter due to a surge in Omicron cases, it thinks the impact on its operations will end within the next 60 days.

"We believe the worst is behind us," CEO Ed Bastian said in an interview with CNBC on Thursday.

The rush of corporate earnings begins in earnest on Friday, when many US banks report results. Shares of these companies have soared since the start of the year. Higher interest rates would help banks make more money on loans.

The KBW Bank Index has jumped almost 12% year-to-date, while the S&P 500 is down more than 2%.

These banks will need to prove they're worthy of the recent influx of cash. Lending and lucrative investment banking fees are expected to deliver for them.

JPMorgan Chase on Friday posted earnings that beat analysts' expectations.

"JPMorgan Chase reported solid results across our businesses benefiting from elevated capital markets activity and a pick up in lending activity as firmwide average loans were up 6%," CEO Jamie Dimon said in a statement.

Counter-programming: Federal Reserve officials made clear this week that they view three interest rate hikes in 2022 as the baseline, but they could do more to fight prices that are rising at the fastest pace in 39 years.

"Our monetary policy is focused on getting inflation back down to 2% while sustaining a recovery that includes everyone," Lael Brainard, who has been tapped to be the Fed's No. 2 official, said at her confirmation hearing Thursday. "This is our most important task."

Christopher Waller, a Fed governor, told Bloomberg TV that the number of rate hikes will depend on "what inflation looks like in the second half of the year."

"If it continues to be high, the case will be made for four, maybe five hikes," Waller said.

Such remarks could compel investors to keep reassessing their portfolios in the coming weeks, since rising interest rates will ding the high-growth stocks that Wall Street has favored during the pandemic.

Businesses react to vaccine mandate decision

On Thursday, the US Supreme Court blocked President Joe Biden's vaccine and testing requirement aimed at large businesses, a major blow to the White House's attempts to use the power of the federal government to fight the Covid-19 pandemic.

Remember: The president has emphasized the importance of getting vaccinated against the virus for months. Eventually, he opted to use the mandate on large employers as his main vehicle to push hesitant Americans to get their shots.

But the Supreme Court sent a clear message that the Occupational Safety and Health Administration, charged with protecting workplace safety, had overstepped its authority.

Business groups had been divided over the mandate. On Thursday, some praised the Supreme Court's decision while others said they would respect the ruling.

The National Retail Federation said it has "maintained a strong and consistent position related to the importance of vaccines in helping to overcome this pandemic." But it called the Supreme Court's move "a significant victory for employers" worried about additional compliance hurdles and costs.

The influential Business Roundtable, for its part, said last year in response to the mandate that it welcomed "the Biden administration's continued vigilance in the fight against Covid." It noted that many companies had already implemented vaccine mandates on their own.

On Thursday, it said it respected the Supreme Court's judgment.

"While companies may take different approaches based on their unique circumstances and diverse workforces, employee and customer safety remain paramount, and efforts to promote vaccination will not abate," CEO Joshua Bolten said in a statement.

The first big IPO of the year is a hit

Shares of private equity firm TPG jumped 15% in their first day of trading on Thursday, sending a positive signal to companies that are debating whether to go public in the early days of 2022.

The latest: Demand was strong for stock in TPG, whose initial public offering raised $1 billion. Shares closed at $34 apiece, giving the company — which was founded in 1992 and manages about $109 billion in assets — a market value of $10 billion. Its investments include Airbnb, Spotify, fitness chain Crunch and Vice Media.

Attention will now turn to other companies like Turo, the car-sharing platform that filed to go public earlier this week. Its listing will be a key test for startups that have thrived during the pandemic, but now need to prove their business models can hold up during the next phase of the economic cycle.

The company is often pitched as Airbnb for cars. It's generated hype as people rethink vehicle ownership — especially at a time when prices for cars are soaring.

Turo, which was founded in 2010, said in its IPO paperwork that it generated more than $330 million in revenue during the first nine months of last year, an increase of 207% compared to 2020. But its losses shot up, too.

Up next

BlackRock, Citigroup, JPMorgan Chase and Wells Fargo report results before US markets open.

Also today:

US retail sales for December post at 8:30 a.m. ET. The University of Michigan's consumer sentiment survey for January arrives at 10 a.m. ET.

Coming next week: Before the Bell will be off Monday, when US markets are closed. We'll be back Tuesday, when BNY Mellon, Goldman Sachs and Truist report earnings.

In comments
Ability chukwumaMachine okay but having some issues. It's a perfect machine..
How do I stop the problem of half water
Carole WI need to replace an MLGY001 relay. Where can I purchase in the US or Colombia?
Vivien OvonoHello,
I'm looking for the automatic gearbox completely from the Nissan juke
JorgDear Sir′s, which kind of machines for the construction industries do you sell?
Thanks & best regards
Jorg
lippertjorg (at) gmail.com
tammy wanghi Fernanda ,I am tammy from China ,office chair manufactuer ,welcome to establish business releationship with you by sales4 (at) hc-chairs,com
Melody VillegasHi, well introduced company profile I am interested. Looking sportswear apparel and can provide OEM service. You can email me at melodyvillegas (at) rudyproject.com.ph.
Hope to hear from you soon.
Thank you.
RogersPls can I buy fishing hooks from yr company??
My email address ;
rhemmynantaba256 (at) gmail.com
How did Xinxianghui join?Lower management making all pressure to crew members
How about the franchised supermarketNo instructions befor for decline employee
How to join ponyMore than professional people working Under to Qdsbg different jobs. But General foreman category some people poor educational back ground & also poor work experience so need to improvement.
How to join Suguo SupermarketJob security are good, comany management are sporting with us, very good sector.
How to join with a shoutIt awesome feel like to work in this place... I spended my 7years of my life 2008 to 2017. .hard rock indiaI like To work hard Rock ...
Andrew Ruggieroim looking for either parts or the whole motor model number YL 8024.
dhikircan you get plasti tap mouth for me? i want large quanty. thanks
Md. Shah AlamNeed 16s (60% BCI Cotton+40% Texloop)
Need 18s (60% BCI Cotton+40% Texloop)
Joanla Wudo you product with GRS certificate? Can you email me for more details as we looking for some accessories with GRS.
How to join a courier companyPoor work culture, higher management doesn't care about employees...Very Low increment.
How to join aj shopProceed in court.Service matter cases.
How to join MaixiangNovo Medi Sciences boasts of having over 70 years of experiance in manufacturing, Performing clinical trials, Marketing and distrubution of the producsts.
How to joinThe company is very supportive to the employes.It is avery good platform for learning new things.It is highly innovative company.
How to join a cateringSj contracts is my second family. Thanks
Related Products