Earnings season tends to be a bit overrated. But this one feels more important.
Stocks have been volatile of late, falling nearly 5% in late June before recovering almost all those losses over the past nine trading sessions. At first it seemed like investors were ready for an extended sell-off after Ben Bernanke set a timeline for the Fed’s QE3 “tapering.” In the past two weeks, however, they’ve changed their minds, and are suddenly buying again.
The back-and-forth of the last month has seemingly brought the market to a crossroads. Where it goes from here could hinge on any number of factors. And that makes this earnings season vital.
Expectations for Q2 earnings are quite low. Total earnings from companies in the S&P 500 are expected to grow only 0.6% from a year ago, down from a 2.3% year-over-year improvement in the first quarter.
Low expectations aren’t a bad thing, however. Earnings were supposed to be in the negative territory in Q1, but instead finished well in the black. That collective earnings beat helped push stocks to record highs in May.
If earnings are better than expected again this season, it could be just the nudge in the right direction the market needs.
With that in mind, here is this week’s (rather light) Q2 earnings calendar – starting with today’s season-opening Alcoa (NYSE: AA) report:
- Yum! Brands (NYSE: YUM)
- Wells Fargo (NYSE: WFC)