Q4 Earnings Season: Banks Lead, Tech Giants Follow as Investors Eye Dollar Impact and 2025 Growth
Staff Editor US Banks Kick Off Earnings Season, Investors Eye Tech Giants and Dollar Impact
As the fourth-quarter earnings season begins, major US banks are set to report this week, drawing significant investor attention. The focus will soon shift to mega-cap tech companies, with analysts closely monitoring the potential impacts of a strong US dollar on corporate earnings.
JPMorgan, Citi, and Wells Fargo are scheduled to report on Wednesday, followed by Bank of America, Goldman Sachs, and Morgan Stanley on Thursday. The tech sector will take center stage in late January, with Apple, Amazon, Microsoft, and Meta Platforms releasing their results.
By February 7, nearly 75% of S&P 500 companies will have reported earnings, with Nvidia’s announcement on February 26 marking the last major report of the season.
Goldman Sachs has identified three key trends for investors to watch during this earnings season. First, the corporate sales growth outlook may be impacted by the strong US dollar, potentially pressuring multinational companies as they convert foreign sales to USD. With approximately 30% of S&P 500 revenues coming from overseas, analysts expect fewer firms to beat consensus sales forecasts compared to previous quarters.
Secondly, companies are likely to address preparations for potential changes in administration, including tax reform, tariffs, and regulation shifts. Communication strategies may involve discussions on passing higher prices to consumers and restructuring supply chains.
The third trend focuses on the sustainability of mega-cap tech earnings growth. These stocks have been driving S&P 500 earnings growth, but the gap is expected to narrow. Declining earnings expectations could lead to outperformance if mega-cap tech companies exceed forecasts, potentially spurring continued stock outperformance.
Overall, the S&P 500 is expected to deliver 11% earnings per share growth in 2025, aligning with Wall Street estimates. While the index has historically beaten quarterly year-over-year earnings expectations, analysts anticipate a potential moderation in the magnitude of earnings per share beats this season.
As the earnings season unfolds, market participants will closely monitor these trends and their potential impact on stock performance and broader economic indicators.
