(Bloomberg) -- US stocks reeling from the impact of high bond yields are facing a new threat from an expected slew of profit warnings, triggered by fading US...
-- US stocks reeling from the impact of high bond yields are facing a new threat from an expected slew of profit warnings, triggered by fading US consumer spending trends.Concerned that Americans might be pulling back, 80% of 567 respondents in the Bloomberg Markets Live Pulse survey said that some sectors are likely to caution about earning trends when they report quarterly results. This will weaken the S&P 500 Index, which gained 1.
Investors are concerned that higher interest rates will start seriously weighing on the economy and eat into profits that are just starting to recover from the steepest slump since the pandemic. A surprising surge in nonfarm payrolls last month increased expectations that the Federal Reserve will raise interest rates again before the end of the year.
For now, the worst of the slump in S&P 500 earnings-per-share is expected to have passed, with analysts forecasting this season to show a near 1% drop from a year ago after profits contracted about 5% in the second quarter, according to data compiled by Bloomberg Intelligence. Yet, for all the headwinds, more than 40% expect this season to show how resilient the economy has been. The first test of that sentiment will be when JPMorgan Chase & Co. kicks off the earnings season in earnest on Oct. 13 and peers follow as banks provide a glimpse into the health of the economy.
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