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US stock market this week: Focusing on corporate financial results, improvement in business performance

According to analysts’ forecasts of Refinitiv’s IBES data, the third quarter financial results of companies adopting the S & P Comprehensive 500 Index are expected to improve from a 21% year-on-year decrease of 21% and a 30.6% decrease in the second quarter. ..

It is highly likely that the deterioration in business performance following the lockdown (city blockade) caused by the epidemic of the new coronavirus had bottomed out in the second quarter.

In the week starting on the 12th, some major banks will announce their financial results. It is highly likely that the recession caused by low interest rates and the new corona put pressure on business performance.

JP Morgan JPM.N and Citigroup CN will announce their financial results on the 13th.

According to strategists, the financial results of companies adopting the S & P Comprehensive 500 Index tend to exceed analysts’ cautious expectations as a whole, and that tendency may become even stronger in the third quarter financial results.

Earnings forecasts for US companies are different from the past, with more cases of upside than downside, and market earnings forecasts have improved in recent weeks.

However, it is unclear whether better-than-expected corporate performance will help stock prices in the coming weeks.

“It’s extremely rare in the last decade, but earnings forecasts have improved after the closing season,” said Art Hogan, chief market strategist at National Securities. “This is a very good sign. It’s likely that we’ll be releasing better-than-expected results this quarterly season,” he said.

However, he said, “The only problem is that many economic indicators have leveled off in the fourth quarter.” It is said that this will weigh on the earnings forecast for the fourth quarter, and there may be cases where investors do not pay attention even if the financial results exceed the forecast.

The number of new unemployment insurance applications announced by the US Department of Labor on the 8th has remained high, highlighting the situation where many unemployed people have not yet returned to work.

The US presidential election (November 3) will also be held during the week when the settlement season peaks. Interest in additional new corona economic measures is also high, and there is a possibility that attention to corporate financial results will decline.

Companies that have already announced their third-quarter earnings have been significantly better than expected, but the market has been sluggish, according to some strategists.

“Investors are looking for very high hurdles,” UBS strategist Keith Parker said in a report.

According to Refinitiv data, by sector, the energy sector .SPNY of the S & P Comprehensive 500 Index is expected to decline by 115% year-on-year, the largest decline.

The consumer goods sector. SPLRCD , which includes companies that have been particularly hit by the new corona, such as retail, travel and tourism, is expected to see a 34% year-on-year decline.

However, the high-tech sector .SPLRCT, which has many large- capitalization stocks, has the lowest forecast of profit decline by sector, with a 0.5% year-on-year decrease.

Tobias Lebkovich, Citi’s chief strategist for US equities, said, “Sure, things have improved compared to the end of June,” but there are various uncertainties over the cure for the new corona, US elections, and the domestic economy. Analyzed that there is a factor.

“The outlook for future performance will be important. Top management may not be alert,” he said.

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