US Market Ahead: Q1 Earnings Season Begins, Insights on Inflation and FOMC Meeting Minutes

April 8, 2024

The US market ushers in the first-quarter earnings season during the second week of April with analysts expect a 3.6% earnings growth for S&P 500 companies. Historically, April has shown a favourable track record for the S&P 500, which has achieved a total return of approximately 9.53% year-to-date.

This week, a mosaic of insights is poised to emerge from the forthcoming earnings releases, including Delta Air Lines, Inc (NYSE: DAL) and banking giants such as JPMorgan Chase & Co (NYSE: JPM), Wells Fargo & Co (NYSE: WFC) and Citigroup Inc (NYSE: C). Economic indicators especially the March Consumer Price Index (CPI) and the March Federal Open Market Committee (FOMC) Meeting Minutes will also be closely watched.

Following Boeing Co’s (NYSE:BA) shares tumbling more than 25% in the first quarter due to quality control issues, it is interesting to observe Delta Air Lines’ earnings result this Wednesday. As a bellwether for the aviation industry, the company’s earnings will offer valuable insights into travel demand trends, particularly examining the average load factor to gauge its performance compared to pre-pandemic levels.

For the banking sector, the market anticipates a rise in Q1 earnings, with a projected 3.7% increase compared to last year. Investors will focus on net interest margins (NIMs), crucial for bank profitability, which represent the difference between interest earned on loans and interest paid on deposits.

To sustain the S&P 500’s strong start in 2024, the index may rely on Federal Reserve’s (Fed) efforts to bring down inflation, potentially leading to interest rate cuts later this year. Wednesday’s inflation data, including Core CPI and CPI, will provide insights into consumer price trends and purchasing power, with an annual inflation rate forecast to rise about 3.4%. The FOMC will analyse this fresh data ahead of its upcoming meeting on May 1, following their decision in March to maintain interest rates at the current target range of 5.25% to 5.5%.

The bond market also comes into focus this week, with the upcoming 10-year Note Auction and 30-year Bond Auction, signalling investor appetite for government debt. Additionally, labour market indicators such as Initial Jobless Claims on Thursday will offer real-time snapshots of employment trends.

With a keen eye on Q1 earnings projections, the latest inflation metrics, and FOMC deliberations, these insights may influence market dynamics and interest rate trajectories. While optimism may boost expectations, astute investors must remain vigilant regarding looming uncertainties in global markets.

Disclaimer: ProsperUs Manager of Content Hailey Chung doesn’t own shares of any companies mentioned.

Hailey Chung

As a lifelong learner, Hailey strives to simplify finance for everyday investors, making it relatable and enjoyable. She desires to support investors with various background, whether they are grappling with limited time and resources in seeking financial freedom or are sincere in stewarding their money well as a token of gratitude for God's provision. With a focus on responsible investing, Hailey balances caution and opportunity, believing life's too short to stress over market fluctuations. Beyond the pursuit of profits, she advocates for investments aligned with building a better world. As Manager of Content at ProsperUs, she leverages her journalism background from The Edge Malaysia, where she honed her skills at the capital and corporate desk.

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