① Starting this Tuesday Eastern Time, the U.S. stock market's third-quarter earnings season will officially kick off; ② Analysts predict that although banks have posted substantial revenue growth over the past few quarters, their profits are expected to decline quarter-over-quarter this quarter; ③ Two major chip industry giants, ASML Holding and Taiwan Semiconductor, will also release their earnings this week.
Investors should buckle up—the U.S. earnings season is about to return.
Starting this Tuesday, Eastern Time, the U.S. stock market's third-quarter earnings season will officially kick off. This week, leading large investment banks will be the first to report their results, and as late October approaches, companies from other sectors will follow suit.
This Tuesday, Wall Street will first see$JPMorgan (JPM.US)$ 、 $Goldman Sachs (GS.US)$ 、 $Wells Fargo & Co (WFC.US)$and$Citigroup (C.US)$the financial report;$UnitedHealth (UNH.US)$and$Johnson & Johnson (JNJ.US)$It will also release its earnings report, providing the market with a snapshot of the U.S. healthcare sector's performance.
On Wednesday,$Bank of America (BAC.US)$and$Morgan Stanley (MS.US)$It will complete the earnings disclosures of the five major Wall Street investment banks, as well as those of a leading alternative asset management giant.$Blackrock (BLK.US)$, the Dutch leader in lithography equipment$ASML Holding (ASML.US)$It also announced its financial results simultaneously.
On Thursday,$Taiwan Semiconductor (TSM.US)$With the release of earnings reports, the market will once again assess the performance of the AI sector.
Will banking sector performance decline?
As usual, the major Wall Street banks will kick off earnings season this week, having just come off what was, at least in the absence of multiple factors driving U.S. Treasury yields to multi-decade highs, their strongest performance in the past decade.
Analysts forecast that, despite robust revenue growth over the past few quarters, quarterly profits are expected to decline on a quarter-over-quarter basis, with trading and investment banking revenues also under pressure.
Over the past month, the U.S. equity financial sector ETF (XLF) has been the second-worst-performing sector in the S&P 500, shedding roughly 4%—outperforming only the utilities sector ETF (XLU). As of Friday's close, weighed down by weakness in the financial sector, the combined market capitalization of the five major banks had evaporated by approximately $270 billion.
Truist Securities' survey indicates that, looking ahead, only 35% of institutional investors expect bank stocks to outperform the broader market—down from 68% in July and 82% in December last year.
Taking Goldman Sachs as an example, CEO David Solomon stated at a conference hosted by Barclays in late September that the bank's fixed-income, foreign-exchange, and commodities trading business had "slightly weakened" compared with the same period last year.
Morgan Stanley Co-President Daniel Simkowitz succinctly summarized at the same conference and also gave investors an early preview of this week's earnings outlook: "One thing is certain: the third quarter will fall far short of the second quarter."
How do financial giants interpret rising yields?
One of the reasons bank stocks have underperformed recently is the sustained rise in U.S. Treasury yields. Consequently, beyond their earnings reports, all market attention will be focused on how these financial giants interpret the implications of rising bond yields.
Last week,$U.S. 10-Year Treasury Notes Yield (US10Y.BD)$It briefly touched around 5.364%, the highest level since 2002; the 30-year yield at one point rose to about 5.732% during trading. On October 8, the winning yield in the 30-year Treasury auction reached 5.618%, the highest auction level since August 2000.
Pimco's chief investment officer, Bill Ivascyn, warned that, with high oil prices stoking inflation concerns and mounting worries about the U.S. government's growing public debt, the benchmark 10-year Treasury yield could climb to 6%—a level not seen since 2000.
The financial reports of the two major chip giants will also be released.
The two chip industry giants, ASML Holding and Taiwan Semiconductor, will also release their earnings this week. As the leading players in advanced chip-manufacturing equipment and wafer foundry services, investors can look to these companies' financial results for clues about potential shifts in the current AI investment boom.
Analysts note that, in addition to the financial results of the two industry giants, the market will also be closely watching management's comments on three key areas: semiconductor manufacturing equipment deliveries, AI chip production, and revenue generation from advanced packaging, as well as the pace of future semiconductor capacity expansion.
Editor/lambor