Making sense of the markets this week: January 23

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U.S. earnings season is in full swing 

Earnings season is off and running. As always, the financials were battling to be the lead-off batter, as we look at the final quarter of 2021. The lineup of fourth-quarter reports includes heavyweights like Goldman Sachs (GS), Proctor & Gamble (PG), Netflix (NFLX) and United Airlines (UAL). 

Since last week, the banks offered mixed results. A few banks underwhelmed the markets, while others knocked it out of the park. We had lacklustre results from major U.S. banks, including JPMorgan (JPM), Wells Fargo (WFC) and Citigroup (C). 

On Tuesday, Goldman Sachs (GS) reported a fourth-quarter profit that missed expectations, sending its shares down as much as 8%. JPMorgan beat profit expectations last Friday, but it saw shares fall 6% on expense concerns. 

The markets were not in a good mood coming into this past week, and these mediocre results were not enough to reverse the downward trend for U.S. stock prices. Here’s a one-month chart for the S&P 500: 

Source: Seeking Alpha – to January 20 

Heading into earnings season, earnings revisions weren’t as strong as pre-announcement periods in 2021. 

In week one of earnings season, earnings were mixed. But most companies surprised to the upside—meaning they had unexpected results. The majority of S&P 500 companies that reported earnings did exceed Wall Street estimates, with earnings that were 8.3% above expectations. 

This Seeking Alpha post suggests: 

“Earnings for S&P 500 companies are expected to rise 22.4% in the fourth quarter, according to data from Refinitiv, which would wrap up a record year where overall earnings soared around 49%. Meanwhile, 26 S&P 500 firms have already reported Q4 results, with 77% of them posting bottom-line results that beat analyst expectations.”

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