US company profits are expected to surge again, but analysts say that may not be enough to sustain the market rally unless big banks and tech keep delivering strong guidance.
01Summary
- 01Third-quarter earnings season starts on Tuesday with JPMorgan Chase and other large banks, after FactSet forecast nearly 30% year-on-year S&P 500 profit growth.
- 02Analysts expect tech profits to rise 65%, helped by higher estimates for Nvidia, Micron Technology and Dell Technologies.
- 03The S&P 500’s forward price-to-earnings ratio has fallen to about 19 times from 21 times over the summer, even as earnings growth has improved.
- 04Taiwan Semiconductor Manufacturing Company reports on Thursday, and its demand outlook is seen as an important signal for Nvidia and other chipmakers.
- 05Bank of America says healthy earnings beats may now be the norm and may not be enough to push shares higher on their own.
02Why it matters
The results will help show whether the rally can continue after strong earnings have already become expected. Investors will be watching banks, tech and guidance for signs that profits can keep offsetting higher rates and stretched valuations.
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