The US third quarter earnings season kicks off this week, with aluminium group Alcoa Inc set to release its third-quarter results before US markets open Tuesday night, our time.
As usual, it will be followed by reports from railroad company CSX, Delta Airlines and aa group of banks, including JP Morgan & Co, Citigroup and Wells Fargo.
Well Fargo will be the interesting reporting company this week as it battles the scandal over 2 million bogus accounts. Just who will the bank put up for the usual analysts briefing?
CEO John Stumpf, which has already been penalised by having $US41 billion in retirement benefits withdrawn, and is not being paid while an external investigation is carried out into the false accounts debacle.
Citi, Well Fargo and JPMorgan are all out this Friday, along with a couple of mid-level banks such as PNC and Republic.
Casino giant, Wynne Resorts also releases its latest quarterly figures which will tell us if the small improvement in Macau gaming revenues is having a positive impact.
There are a couple of big foreign groups reporting into UK pay TV giant, Sky, which is controlled by 21st Century Fox, along with WH Smith and Taiwan Semiconductor.
US analysts are not feeling particularly optimistic, forecasting a 1% fall to mark the fifth straight quarter of declining earnings for the S&P 500, according to a note from S&P Global Market Intelligence.
Earnings growth in the energy sector is once again expected to be weak, along with telecoms, industrials and real estate seeing losses. Sectors seen as doing well include materials, financials, utilities and consumer staples.
In a note on Friday, FactSet said that as of last week, the S&P 500 is expected to report a year-over-year decline in earnings of 2.1% for the third quarter.
But FactSet said that “based on the average change in earnings growth due to companies reporting actual earnings above estimated earnings, it is likely the index will not report a decline in earnings for the third quarter."
"Over the past four years on average, actual earnings reported by S&P 500 companies have exceeded estimated earnings by 4.3%. During this same time frame, 68% of companies in the S&P 500 have reported actual EPS above the mean EPS estimates on average.
"As a result, from the end of the quarter through the end of the earnings season, the earnings growth rate has typically increased by 2.9 percentage points on average (over the past four years) due to the number and magnitude of upside earnings surprises.
"If this average increase is applied to the estimated earnings decline at the end of Q3 (September 30) of -2.0%, the actual earnings growth rate for the quarter would be 0.9% (-2.0% + 2.9% = 0.9%). If the index does report growth in earnings for Q3 2016, it will mark the first time the index has recorded year-over-year growth in earnings since Q1 2015 (0.5%),“ FactSet said.
