Latest news with #JohnButters
CNBC
18-07-2025
- Business
- CNBC
Strong start for earnings season creates support for Wall Street's record highs
The opening week of earnings season has given Wall Street bulls plenty to celebrate, helping the S & P 500 hit new highs. Earnings season kicked off with the big banks, which mostly delivered positive results for the quarter. Continuing the strength in financials, Interactive Brokers and Charles Schwab moved higher on Friday after their earnings reports. Even some stocks that were falling after their reports, including Netflix and 3M on Friday, beat Wall Street expectations for the second quarter on the headline metrics. According to FactSet senior earnings analyst John Butters, 12% of S & P 500 companies have already reported their quarterly results. Of those, 83% have beaten Wall Street expectations for earnings per share, which is above the five-year average of 78%. The percentage of companies that have posted a positive revenue surprise is also 83%. Of course, expectations have fallen over the course of the year, so the beats aren't necessarily as impressive as those in some prior quarters. Still, Michael Arone, chief investment strategist at State Street Investment Management, said the story of the first week of earnings season is "so far, so good." That goes for the results themselves, as well as the outlooks and commentary from management. "There is an opportunity here for corporate executives to suggest, 'hey, the outlook's just too murky so we're not going to provide that guidance.' Yet I feel like not only has it been more optimistic than I would have thought — particularly from the big banks — but also a bit more clear. And then I'm surprised at the confidence or the conviction that they're providing with that future guidance," Arone said. .SPX 5D mountain The S & P 500 hit an intraday record on Friday. One thing helping earnings appears to be the weaker U.S. dollar, which can make earnings generated overseas look stronger to domestic investors. PepsiCo and Netflix were among the companies that have highlighted that change this week. Arone said that could continue to boost tech company results in particular as the earnings season progresses. One caveat is that earnings reports tend to be grouped by industry, and the stats and narrative can change as different sectors take their turn in the hot seat. Arone highlighted retailers as a group he is keeping an eye on. "The big retailers, they typically report later on in earnings season, so it will be interesting to see what they're suggesting about consumer trends," such as whether customers are trading down to cheaper goods, Arone said.
CNBC
18-07-2025
- Business
- CNBC
Magnificent Seven earnings kick off next week with stocks near all-time highs
It all comes back to tech, once again. Magnificent Seven earnings kick off in the week ahead, with Alphabet and Tesla the first of the megacaps to report this earnings season at a time when the artificial intelligence trade — along with strong quarterly results and economic data — is once again carrying the market to all-time highs. The S & P 500 reached yet another milestone Friday, with tech driving much of the recent gains. Nvidia alone is up more than 4% this week, after first crossing the $4 trillion milestone last week. Tesla shares are also up more than 4%. Alphabet and Amazon are also higher on the week. "I think people are expecting great things out of any of the, let's call it — except for Apple — of the remaining Mag Seven," said Mark Malek, investment chief at Siebert Financial. "It can overhang everything else, right, that we're going to be looking at next week." .SPX 5D mountain The S & P 500 over the past five days Much of that is because the Magnificent Seven is set to be a significant driver of growth this reporting season, accounting for roughly half of the S & P 500's expected earnings growth of 5.6%. Together, the megacap companies are projected to post earnings growth of over 14% in the second quarter, while the other 493 S & P 500 companies that are set to grow just 3.4%, according to FactSet's John Butters. If Alphabet delivers on its earnings report as it's expected to, it could continue to lift the market and raise expectations for other names that are reporting later on. As it is, analysts are already getting more confident in Alphabet, as durable growth and rising forecasts could mean the Google parent will outperform. That could add to the risk-on tilt already evident in markets. The S & P 500 and Nasdaq Composite , both of which have significant exposure to tech, are on track to end the week with gains. The Dow Jones Industrial Average was last slightly lower on the week. Potential hurdles await Of course, there are many challenges remaining for the market. Namely, ongoing uncertainty around President Donald Trump's tariffs that could go higher than a minimum of 10%. The Financial Times reported, citing people briefed on the talks, that the president is demanding a minimum tariff of 15% and 20% on any deal with the European Union. Wall Street is also coming up fast on an Aug. 1 deadline for the EU to reach a trade deal before the U.S. implements a 30% tariff on the bloc. Additionally, valuations in the U.S. equity market remain stretched, economic growth is expected to soften, the federal deficit is set to widen, and geopolitical risks remain. Yet many investors remain assured those challenges won't derail the market, so long as companies can continue to beat expectations this earnings season. On that front, the second-quarter earnings season is off to a strong start. Many companies appear to have gained a handle on navigating tariffs, or are finding their sales inflated by a stronger dollar. Delta Air Lines , which pulled its guidance last earnings season on tariff uncertainty, reinstated it this time around after the CEO said bookings stabilized. Of the roughly 60 S & P 500 companies that have posted second-quarter results thus far, 86% have surpassed analyst expectations, according to FactSet data. And, beats are getting rewarded. Two days after companies beat estimates, the stocks have been rising 2.1%, above the five-year average of 1%, according to FactSet's Butters. For the time being, at least, that suggests further momentum for stocks, so long as a recession case does not appear. "I think the market would just continue to go higher, right? Because the momentum is there right now," Siebert Financial's Malek said. "The market wants to go higher at this point." Week ahead calendar All times ET. Monday, July 21 10 a.m. Leading Indicators (June) Earnings: Steel Dynamics , Verizon Communications , Domino's Pizza Tuesday, July 22 10 a.m. Richmond Fed Index (July) Earnings: Baker Hughes , Intuitive Surgical , Enphase Energy , Capital One Financial , Texas Instruments , EQT , Lockheed Martin , Sherwin-Williams , Philip Morris International , IQVIA Holdings , Coca-Cola , Halliburton , Quest Diagnostics , PulteGroup , KeyCorp , General Motors , D.R. Horton , Equifax , Danaher , RTX , Northrop Grumman Wednesday, July 23 10 a.m. Existing Home Sales (June) Earnings: O'Reilly Automotive , ServiceNow , Chipotle Mexican Grill , T-Mobile US , United Rentals , Tesla , International Business Machines , Alphabet , Lamb Weston , Freeport-McMoRan , General Dynamics , Lennox International , Hasbro , Boston Scientific , Thermo Fisher Scientific, Hilton Worldwide Holdings , AT & T , Otis Worldwide , NextEra Energy , GE Vernova , Raymond James Financial Thursday, July 24 8:30 a.m. Continuing Jobless Claims (07/12) 8:30 a.m. Initial Claims (07/19) 8:30 a.m. PMI Composite preliminary (July) 8:30 a.m. S & P PMI Manufacturing preliminary (July) 8:30 a.m. S & P PMI Services preliminary (July) 10 a.m. New Home Sales (June) 11 a.m. Kansas City Fed Manufacturing Index (July) Earnings: Edwards Lifesciences , Deckers Outdoor, Intel , Newmont , Ameriprise Financial , Union Pacific , Pool , Nasdaq , A.O. Smith , Valero Energy , West Pharmaceutical Services , Honeywell International , Dow , Westinghouse Air Brake Technologies , Textron , Tractor Supply , L3Harris Technologies , Keurig Dr Pepper , CenterPoint Energy , Blackstone , Southwest Airlines Friday, July 25 8:30 a.m. Durable Orders preliminary (June) Earnings: HCA Healthcare, Phillips 66, Charter Communications , Centene
CNBC
11-07-2025
- Business
- CNBC
These companies reporting next week have a history of beating earnings expectations
A handful of companies with earnings slated for next week tend to exceed Wall Street's estimates and get a bump in their share prices. Asset management heavyweight BlackRock is among these names. Earnings season for the second quarter could portray a period of slow growth. Analysts have lowered their earnings per share estimates for the quarterly period and have continued to lower them for 2025 as market concerns about tariffs and inflation remain, according to FactSet senior earnings analyst John Butters. Moreover, Butters found the estimated year-over-year earnings growth rate for the S & P 500 is 5% for the second quarter. If that ends up being the growth rate for the quarter, it would be the lowest earnings growth reported by the index since the fourth quarter of 2023, his July 3 analysis reflected. Still, some companies reporting next week could deliver positive surprises. We used earnings data from Bespoke Investment Group to find names that have a track record of beating analysts' estimates and subsequently posting stock gains. The companies below have beaten earnings per share estimates at least 70% of the time and average a gain of 1% or more after posting results. BlackRock beats earnings estimates 81% of the time and rises roughly 1% on average after its results come out. Shares are up 7% year to date. Regional financial stocks Citizens Financial and Ally Financial also exceed earnings estimates roughly 80% of the time. Their stocks average advances of 1.3% and 1.1%, respectively, on the back of their quarterly releases. Financials have been strong this year as investors hold faith that President Donald Trump's administration will ease deal-making regulations and bring back greater domestic manufacturing — both of which could give greater business to investment banks. The Invesco KBW Bank ETF is up 12% in 2025, significantly outperforming the broader market. The financials sector has rallied more than 164% since the presidential election and has jumped about 9% year to date, meanwhile. One stock with a notably high beat is tools manufacturer Snap-On at 89%. Shares of Snap-On are in the red for the year due to economic uncertainty adding pressure to consumer spending power and sales.
Forbes
09-04-2025
- Business
- Forbes
A Simple Equation Shows The S&P 500 Falling Another 20% Or More
As we all know the markets took a beating last week, driven by President Trump's tariffs announcement and retaliation by China. The S&P 500 fell by 10.5%, the Nasdaq by 11.4% and the Dow by 8.1% over two days, respectively. From Michael O'Rourke at Jones Trading (no relation), 'The S&P 500 sell-off Thursday and Friday is among the worst two-day declines for the benchmark index in history. The move is only surpassed by the 1987 crash, the pandemic, and one of the many sharp declines during the Global Financial Crisis. In each of those instances, the S&P 500 continued to experience outsized volatility, but it did bounce notably over the next two weeks. The pandemic was the only 'V' bottom among the episodes.' The biggest question or concern is, 'Has the market reached a low or will the sell-off continue?' One way to answer that question is to look at an equation that is used to determine a stock price or Index value: Earnings x Multiple = Price Earnings component is exposed downwards John Butters, Vice President and Senior Earnings Analyst at FactSet, wrote in his weekly analysis on Friday, April 4, that 'during the first quarter, analysts lowered EPS estimates by a larger margin compared to the four most recent averages.' During the quarter March quarter's EPS fell by 4.2% ($62.89 to $60.23) vs. the average of 3.3% for the past 20 quarters. 2025's full-year estimate dropped by 1.6% from $274.12 to $269.67 over the quarter. The projection has fallen from approximately $279 in late August last year. S&P 500 2025 EPS John Butters, Vice President and Senior Earnings Analyst, FactSet Now that President Trump is imposing worldwide tariffs it is widely expected that earnings will fall. While there will be information provided with first quarter earnings announcements, there will still be a lot of unknowns. So here are projections based on percentage declines from $269.67. Valuation component is at best at equilibrium The S&P 500's earnings multiple peaked at approximately 22.2x in early November last year. Butters estimates that is has fallen to 19.4x as of last Friday. This is below the five-year average of 19.9x and above the 10-year average of 18.3x. The S&P 500's forward 12-month P/E ratio is now at 18.5x based on Tuesday's close. S&P 500 forward 12-month P:E ratio John Butters, Vice President and Senior Earnings Analyst, FactSet Uncertainty leads to lower valuation multiples and there is a lot of uncertainty in the economy and the markets, driven by President Trumps actions, and not just his tariff policy. The number of Executive Orders that are essentially dismantling Federal Agencies and allowing DOGE to essentially lay off people add more layers to investors' concerns. Tariff uncertainty isn't going to become clear anytime soon Unless President Trump announces some concrete and real tariff deals, and not hyperbole, it is hard to see how earnings and valuation both don't fall. My thought is that Trump isn't going to back down. Yes, there will be some wins, at least from an optics perspective, but especially with China neither Trump nor Xi wants to be the first to flinch. Another tell from the Administration is Vietnam. Vietnam offers zero tariffs and Trump administration says not enough. If the goal of the Trump administration is to get Vietnam to import as much as it exports that isn't going to happen. In 2023 Vietnam's GDP was $430 billion vs. the United States' $27.4 trillion, or 1.5% the size of the United States. And the U.S. doesn't make what Vietnam wants, while Vietnam makes what U.S. consumers wants. O'Rourke's Tuesday note included, "Today's eye-opener that contributed to the negative equity market reversal was U.S. Trade Representative Jamieson Greer. Greer testified before the Senate Finance Committee regarding the President's Trade Policy Agenda. Greer made many statements that should alarm investors.' O'Rourke added, "This last exchange may be both the most telling and the most alarming. Senator Mark Warner asked Greer about the 10% tariff the Administration was applying to Australia. Greer responded, 'We're addressing the $1.2 trillion deficit, the largest in human history that President Biden left us with. We should be running up the score in Australia, they ban our beef, and they ban our pork…' At that point Warner cut him off and stated that the U.S. runs a trade surplus with Australia. It is a fairly sizable $17.6 billion surplus. If Australia applied the Administration formula, the U.S. surplus is 52.5% of U.S. exports to Australia, and they would charge us a 26% tariff.' I've heard many stories about products on boats right now that will be much more expensive when they land and some already have price stickers on them. Who eats the tariff cost? And if you reprice the products sales will more than likely be lower and margins will take a hit. Earnings times valuation equals price Current earnings of $269.97 times Tuesday's valuation of 18.5x equals the S&P 500 Index value of 4,983 at the close. These are S&P 500 values based on decreased earnings at the current 18.5x valuation. These are S&P 500 values based on lower valuation at the current earnings of $269.97. These are calculations on what the S&P 500 could fall to based on decreased earnings and lower valuations. Markets hate uncertainty, leading to lower prices It is hard to build a case that earnings will move higher or that investors nerves will get better, which is needed for the markets to rebound. Probably the best-case scenario is the 2% drop in earnings and a small fall in valuation to 18 times earnings leading to only a further 4.7% drop. However, it is more likely that the S&P 500 Index will fall at least another 10% and it could be 20% or more.
Yahoo
07-04-2025
- Business
- Yahoo
Trump Tariff Uncertainty Could Make for a Bumpy Q1 Earnings Season
Tariff uncertainty continued to wreak havoc on global markets as businesses and investors braced for tariffs that are expected to lift the U.S. tariff rate to its highest level in more than a century. That uncertainty is likely to remain high when S&P 500 companies begin reporting first-quarter results later this week. Wall Street analysts have been increasingly cautious with their outlooks, and some market watchers are forecasting a sharp drop in the number of companies issuing guidance for the current quarter and the remainder of the year. The tariff outlook remained murky Monday, with U.S. stocks wavering between gains and losses as Trump threatened to slap an additional 50% tariff on Chinese goods in response to China's retaliatory tariffs. The White House also today quashed rumors that Trump was mulling a 90-day pause on reciprocal tariffs. The tariffs outlined by Trump last week could scramble global supply chains, raise the risk of a recession, and stoke inflation. In a sign of the times, 421 sell-side broker reports published last week mentioned the word 'chaos,' more than twice the prior week's total, according to AlphaSense. In just the last two days, 'chaos' has cropped up in more than 100 such reports. Companies may choose caution as they report results; ones that have already offered first-quarter guidance have been increasingly wary. 'We will see an upcoming earnings season for 1Q in which it would not surprise us if many companies/mgmt teams did not give guidance,' Wedbush analysts wrote last week. They expect this coming earnings season to resemble early 2020 when uncertainty about the spread of Covid-19 and the longevity of lockdowns caused the number of S&P 500 companies issuing guidance to plummet by more than 50% year-over-year, according to data from FactSet Research. Market participants are already struggling to make sense of Trump's tariffs and the impact they could have on their investments. Less guidance would likely reduce investors' visibility even further, making it more difficult to model earnings growth and, thus, value debt and equity. "At a minimum, we will likely see companies give more conservative guidance or wider ranges than normal for guidance," said John Butters, Vice President and Senior Earnings Analyst at FactSet. White House National Economic Council Director Kevin Hassett on Sunday said more than 50 countries had initiated talks with the administration, seeking relief from the tariffs set to take effect on Wednesday. Read the original article on Investopedia
