Summary
Weekly Tee Up: Earnings in Full Gear This will be a busy week for corporate earnings. As well, the United States has a new president and new fiscal policies should start rolling out. Last week, the Dow Jones Industrial Average gained 3.7%, the S&P 500 rose 2.9%, and the Nasdaq popped 2.5%. So far, in 2025, all three indices are up about 2%. The earnings calendar is packed. On Tuesday, Netflix, United Airlines, 3M, and Capital One Financial report; on Wednesday, Johnson & Johnson, Procter & Gamble, Abbott Labs, Halliburton, Alcoa, General Dynamics, Travelers, and GE Vernova; on Thursday, American Airlines and Intuitive Surgical; and on Friday, American Express, Verizon, Archer-Daniels Midland, Xerox, and Whirlpool. Only 42 of the S&P 500 companies have reported, bur earnings so far show 11% growth from the prior-year quarter. That compares to a 9% growth rate in 3Q. Financials is the sector with the most companies having reported so far — and the growth rate in these early weeks of the earnings season is a whopping 26% (as reported by Refinitiv). We have raised our 2025 and 2026 forecasts for S&P 500 EPS growth. Based on our expectations for continued economic growth, we now forecast 12% EPS growth in 2025, up from our prior forecast of 7%-9%. For 2026, we now forecast 11% growth, up from 7%-9%. On the economic calendar, it’s a quiet week. On Wednesday, data on Leading Economic Indicators will be reported. On Friday, Existing Home Sales hit the tape. The Economic Call of the Week from Argus Economist Chris Graja is Existing Home Sales. For December, Chris forecasts 4 million homes at a seasonally-adjusted annual rate, matching November, and has offered the following commentary. ‘An upside surprise could be important for big-ticket spending and Consumer Discretionary stocks such as Home Depot, Lowe’s, Best Buy, and Williams-Sonoma. Housing turnover is one of the best leading indicators for Consumer Discretionary stocks. Sellers typically make improvements to get their houses ready for sale and new buyers often paint and buy new furniture, fixtures and appliances, even if they don’t spring for new bathrooms, flooring, and kitchen cabinets. Last week Harvard University’s Leading Indicator of Remodeling Activity projected modest growth for 2025, rising to about 1.2% in 3Q and 4Q.’ Last week, consumer inflation data grabbed the headlines. The headline CPI number came in as expected at 2.9% for December, compared to 2.7% for November. However, Core CPI was 3.2% in December, down from 3.3% in November. Over the past few years, inflation has been decelerating
