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US Q2 Earnings Season Calendar: Key Watches and Expectation


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The second quarter earnings season for US stocks will officially kick off from July 14th. It is forecasted that the upcoming Q2 earnings reports will mark the third consecutive quarter of declining revenues and earnings growth.

original-size.webpSource: Bloomberg
 
Hebe Chen | Market Analyst, Melbourne | Publication date: Thursday 13 July 2023 

The second quarter earnings season for US stocks will officially kick off from July 14th, 2023. It is forecasted that the upcoming Q2 earnings reports will mark the third consecutive quarter of declining revenues and earnings growth.

According to Factset, the S&P 500 is projected to demonstrate a yearly earnings decline of -7.2% for the Q2, 2023 and an approximately 2% decline in EPS.

However, at the same time, the performance of the US stock market this year has surprised many investors. Despite the Federal Reserve's ongoing interest rate hikes and the multiple headwinds faced by US corporations, the S&P 500 has already experienced a remarkable surge of 15% since the start of the year, reaching a yearly high in June. So, will the upcoming earnings season continue to propel the US stock market upwards or will it become a turning point?

SP500Q2EPSEstimate.jpg

Here are the key highlights to watch in weeks ahead:

US Q2 Earnings Week 1 (July 14-16)

As usual, the second quarter earnings season will raise the curtain by major banks.

The key highlights of this week will include the earnings reports from Citigroup, JPMorgan Chase, and Wells Fargo.

In the previous quarter, major bank stocks delivered eye-widening strong performances. Despite a regional banking crisis shock in March, the large US banks showcased impressive results. JPMorgan Chase, in particular, experienced a surge of over 7% in its stock price following the release of its Q1 earnings report, marking one of the company's best earnings days.

Generally, bank stocks are heavily influenced by interest rate cycles. On one hand, rising interest rates benefit banks by increasing deposit volumes and net interest margins (NIM). On the other hand, the demand for loans tends to decline. Both of these factors will be major focal points in the upcoming earnings reports of the major banks.

US Q2 Earnings Week 2 (July 17-23)

The second week of the US Q2 earnings season will showcase a more diverse range of industry sectors, including banking, technology, and consumer discretionary.

During the first half of the week, the focus will remain on bank stocks, with Bank of America, Morgan Stanley, and Goldman Sachs scheduled to announce their earnings.

Moving into the mid-week, the spotlight will shift to Netflixand the market darling, Tesla.

Netflix is set to announce its Q2 earnings after the US market closes on July 19th. In the first quarter, Netflix's performance was not particularly impressive, with a modest year-on-year revenue increase of 3.7% but a significant drop of 18% in net profit. The company continues to face concerns regarding its subscriber growth, which remains a key watch point for the Q2 report.

On the same day, Tesla will also unveil its Q2 earnings. Market expectations are for its earnings per share (EPS) to slightly increase from $0.65 in the same period last year to $0.69. However, the key watch point for Tesla will be its profitability, as the company's net profit margin saw a significant contraction of nearly 40% in the previous quarter following multiple rounds of price cuts.

US Q2 Earnings Week 3 (July 24-30)

The spotlight of the third week of the US Q2 earnings season will be dominated by tech giants.

On July 25th, Tuesday, Google (Alphabet), Microsoft, and Snap will be on the central stage.

On July 26th, Wednesday, Facebook (Meta), Boeing, and Coca-Cola will release their Q2 earnings report.

On July 27th, Thursday, investors' eyes will turn to Amazon, Intel, and McDonald's Corp.

These companies' earnings reports will not only provide insights into their individual business performance but also shed light on broader trends in technology development and consumer behaviour. For example, investors and analysts will be particularly interested in gaining a glimpse into the progress and potential of AI-related business models from companies like Alphabet, Microsoft, and Meta.

US Q2 Earnings Week 4 (July 31-August 6)

Entering the first week of August, investors will likely be closely watching the performance of Apple, AMD, and Alibaba.

Apple, with its stock price reaching new all-time highs in recent times, is anticipated to report an approximately 2% yearly decline on both revenues and earnings.

AMD, as a leading chip company benefiting from the AI gold rush this year, has seen its share price soar by over 70% year to date, despite a dip in net income and margin in Q1.

Alibaba, the Chinese e-commerce giant, has been busy making large-scale strategic moves in the past quarter. This includes breaking down the conglomerate into six business units and undergoing a leadership reshuffle. Investors will eagerly await Alibaba's presentation of its business performance after all these major changes.

US Q2 Earnings Season: Summary

The upcoming US Q2 earnings season is not only a test for US companies individually but also a crucial barometer for overall market sentiment. If the earnings season demonstrates strength and resilience, it is likely to bolster the market's existing bullish momentum, which has faced criticism for being disconnected from the US economy fundamentally. However, if the earnings season highlights the adverse impact of the Federal Reserve's aggressive interest rate hikes, it could prompt a reassessment of the prevailing optimism in the first half of 2023.

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