Increased Profits Fail to Halt Stock Market Decline
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The earnings season started slow with only 41 S&P 500 companies reporting, with most of them being banks that exceeded earnings expectations. The pace is expected to pick up with 159 companies scheduled to report this week. The S&P 500 experienced a 3% decline for the week, leading to a 5.4% decrease quarter-to-date. Sales growth improved last week and is in line with expectations. Key companies such as Tesla, Meta Platforms, Microsoft, and Alphabet are scheduled to report earnings this week. Financial sector earnings are expected to surpass estimates, while the healthcare sector has underperformed. Sales growth is expected to benefit from solid nominal GDP growth for the first quarter. Blended earnings growth is currently at -0.5% year-over-year. Inflation concerns and economic growth uncertainties have impacted Treasury yields. The recent inflation surprises have challenged the narrative of a soft landing for the economy. The promise of artificial intelligence (AI) remains strong, but the high valuations of AI-related stocks have made them vulnerable to market fluctuations. The Federal Reserve's decision to hold off on rate cuts has prevented compounding inflation issues. The market is experiencing volatility and uncertainty, driven by inflation fears and economic growth prospects. The upcoming earnings reports from key companies will be closely watched to gauge the health of the economy and market sentiment. Investors are cautiously optimistic about the earnings season's potential impact on stock valuations and the overall market outlook.
https://globeecho.com/increased-profits-fail-to-halt-stock-market-decline/