Better than expected.
It’s earnings season – the time when publicly traded companies report on how profitable they were during the first quarter of 2023. So far, reports suggest that companies listed on United States stock exchanges did better than many had anticipated. Almost 20 percent of companies in the Standard & Poor’s 500 Index have reported and three-out-of-four have exceeded earnings expectations, reported John Butters of FactSet.
“At any given moment, earnings expectations reflect everything that’s happening in the world, from the economy and the Federal Reserve to interest rates and geopolitics. Right now, most of the fear stems from expectations about the economy. The Fed has lifted interest rates to tamp down inflation by reducing economic demand, and so far, that seems to be working. The rate of inflation has been cut almost in half from its post-COVID peak, but growth is slowing with it…And since higher rates operate with a lag, the full effects of the rate hikes probably haven’t been felt yet, raising the possibility of a recession,” reported Jacob Sonenshine of Barron’s.
Banks were among the first companies to report on earnings, and the news reassured investors who were concerned about financial stability after the collapse of three regional banks. Despite contributing $30 billion to bailout a regional bank, big U.S. banks generally reported healthy results and higher interest income in the first quarter, reported Max Reyes of Bloomberg.
The banks still face significant challenges. Loan delinquencies have been rising from historic lows as the pandemic policies have come to an end. The four largest lenders in the United States saw a 73 percent increase in consumer loan defaults and have significantly increased the assets set aside to cover loan losses.
Last week, many major U.S. stock indices finished the week close to where they started it, according to Barron’s. Yields on U.S. Treasuries generally moved higher before retreating a bit.
https://www.barrons.com/articles/stock-market-barely-budges-but-earnings-season-is-going-swimmingly-4d98820?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/04-24-23_Barrons_The%20Stock%20Market%20Barely%20Budged_2.pdf)
https://www.bloomberg.com/news/articles/2023-04-19/wall-street-banks-sail-through-a-quarter-of-collapsed-lenders (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/04-24-23_Bloomberg_Wall%20Street%20Banks%20Sailed%20Through%20a%20Quarter%20of%20Collapsed%20Lenders_3.pdf)
https://www.barrons.com/articles/apple-carplay-gm-future-car-8542281f?mod=hp_LEAD_1 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/04-24-23_Barrons_The%20Battle%20for%20the%20Future%20of%20the%20Car%20is%20Under%20Way_6.pdf)
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