Wall Street awaits quarterly reports from US banks

From now until the end of January, the global stock markets will primarily be alive with the publication of financial results for the fourth quarter of 2022. Expectations are low, so it will be easy to beat them. The question is, will it be enough to push the stock indices higher?

Will the better (?) than expected results push up the indices?

On Friday, January 13, the next season of publishing results on Wall Street starts. The companies will boast of the results for the fourth quarter of 2022 on Wall Street. Traditionally, the season will be opened by large American banks. Before the start of Friday's session in the US, quarterly reports will be published by: Bank of America, BoNY Mellon, Citigroup, JP Morgan Chase and Wells Fargo.

From data collected by factset it follows that the companies included in S & P500 index will record a 2022% drop in earnings per share in the fourth quarter of 4,8. This would be the first such decline since Q2020 6,5. FactSet points out that analysts have significantly lowered their earnings forecasts in recent months. Much stronger than average. These have been adjusted by 5%, while the average for the last 2,5 years is 5%. This may mean that companies can quite easily show better-than-expected results. Especially since this situation is something permanent on Wall Street. In the last 77 years, as much as 500 percent. companies from the S&P8,7 index boasted a profit per share higher than market forecasts, beating them by an average of XNUMX percent.

At this point, of course, it is reasonable to ask whether the generally weaker quarterly results, despite the fact that they will probably be better than forecasts, will be enough to generate an upward movement on Wall Street?

They are not enough, but they create a good foundation for such a movement. If the companies do not scare investors with forecasts of results for the next quarters, and at the same time they tempt with a credible forecast of reducing operating costs, then the earnings season will be an impulse for growth. Otherwise, the bulls will again have to defend the December lows on the American indices, which would certainly become a strong impulse for greater and longer profit taking on the WSE and other European stock exchanges.

We have an important 2 weeks ahead of us

Equity markets will be affected by company results until the end of January. At the beginning of February, investors' attention will again shift to monetary policy and central banks. Especially since it will be a really strong start of the month. On February 1-2 he will make decisions on interest rates Fed, European Central Bank i Bank of England.