Deutsche Bank strategists have highlighted the commencement of the United States Q3 earnings season, with major banks such as JPMorgan, Wells Fargo, Goldman Sachs, and Citigroup set to report their results. The strategists project that S&P 500 earnings growth will remain at a record 34% year-on-year in Q3, significantly exceeding the 27% consensus estimate. They argue that the consensus is overly pessimistic, embedding too much of a slowdown and thus providing room for above-average earnings beats this quarter [1].
Despite expectations for strong overall earnings, the strategists caution that financials are anticipated to be among the sectors with the weakest year-on-year growth, which should be considered when interpreting the upcoming bank results [1]. The positive outlook is not limited to the US, as Deutsche Bank expects a robust earnings season on both sides of the Atlantic and globally [1].
In terms of market performance, US equity gains were ultimately reversed due to a continued selloff in chip stocks, with the Philadelphia semiconductor index declining by -2.67%. However, two-thirds of the index constituents ended higher, and the Mag-7 group closed up by +0.47%. Prior to the late US equity dip and an overnight sell-off in Asia, major European indices closed higher, with the Stoxx 600 rising by +0.65%, the DAX by +0.76%, and France’s CAC 40 by +0.38%, despite higher gas prices [1].
Looking ahead, the market will be watching for earnings releases from major US banks and economic data such as the NFIB’s small business optimism index for September and existing home sales. Additionally, speeches from Federal Reserve officials Waller, Barkin, and Collins are scheduled for today [1].
CONCLUSION
Deutsche Bank anticipates a strong Q3 earnings season for the S&P 500, with growth expected to surpass consensus estimates. While financials may lag, the overall outlook for equities remains positive, though recent volatility in chip stocks and mixed global market performance suggest investors should remain attentive to sector-specific developments and upcoming economic data.