Now that in we are in July 2019, it means one thing as far as the US stock market is concerned: we are about to get into the US earnings season. Officially, the US earnings season for Q2 2019 commences on Monday July 15, 2019. Wall Street is not expecting a very stellar earnings season, as it expects the US-China trade war and the gloomy global economic forecasts to weigh on company earnings.
The earnings of the S&P500 index are being expected to fall by 2.6% on an annualized basis and earnings of small cap and technology stocks are expected to decline by as much as 12% on the average. If earnings indeed decline it will be the first time since 2016 that earnings declined for two quarters in a row.
The sector for industries and materials, which were the most exposed sector to the US-China trade imbroglio, may suffer the most. Also, data from Factset shows that nearly 4 out of 5 companies have lowered their forecasts, of the 114 companies that have issued earnings projections so far.
So far, Wall Street is surging to record levels with the S&P500 pushing past the 3,000 mark for the first time yesterday. The Dow is also surging higher. However, if the earnings season starts off on a bad note next week, the indices could take a breather and we may also see some sort of a selloff. However, the expected rate cut by the US Federal Reserve at the end of July could help offset any selloffs that may occur in the US markets.
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