This website collects cookies to deliver better user experience. Cookie Policy
Accept
Sign In
The Wall Street Publication
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Reading: Investors Watch for Rising Costs in Earnings This Week
Share
The Wall Street PublicationThe Wall Street Publication
Font ResizerAa
Search
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Have an existing account? Sign In
Follow US
© 2024 The Wall Street Publication. All Rights Reserved.
The Wall Street Publication > Blog > Markets > Investors Watch for Rising Costs in Earnings This Week
Markets

Investors Watch for Rising Costs in Earnings This Week

Editorial Board Published October 10, 2021
Share
Investors Watch for Rising Costs in Earnings This Week
SHARE

Third-quarter earnings season kicks off this week, with investors on the lookout for signs that rising costs will pose a problem for U.S. corporate profits this quarter and beyond.

What companies reveal about the impact of any supply-chain problems, labor shortages and the continuing pandemic could determine the tone of trading, following a month of ups and downs that have pushed the S&P 500 down 3.2% from its September record. Already, a handful of boldface-name firms have said they are struggling with the crosscurrents of an unusual economic expansion, sending their shares lower and raising concerns that further surprises might await.

Big U.S. companies slated to report this week include JPMorgan Chase & Co., Delta Air Lines Inc., DAL -0.69% UnitedHealth Group Inc. UNH 0.93% and Domino’s Pizza Inc. DPZ -0.50%

“It’s going to be a difficult and confusing results season coming up,” said Anik Sen, global head of equities at PineBridge Investments, who expects to see numerous companies miss analysts’ expectations for revenue and operating profit margins.

Analysts expect that earnings from companies in the S&P 500 grew 28% in the third quarter from a year earlier—a time when businesses were working to recover from the effects of the pandemic.

But as countries emerge from the restrictions of the pandemic, bottlenecks in global supply chains are leading to shortages of the components needed to produce finished goods. A jump in costs for raw materials is also pressuring manufacturers’ bottom lines.

Wall Street is betting that company profitability has edged lower, in part as a result of the unevenness of the pandemic recovery: The net profit margin for the S&P 500 is forecast to come in at 12.1% for the third quarter, down from a record of 13.1% in the previous quarter, according to FactSet.

Even so, Morgan Stanley strategists say they don’t believe supply-chain problems have been fully factored into the market’s expectations for corporate earnings—and if they are right, there could be room for some unpleasant surprises in coming weeks.

“If they’re having to pay more and they’re unable to pass it on to end purchasers or consumers and it’s hitting profitability, that’s something that will be concerning,” said Holly MacDonald, chief investment officer at Bessemer Trust.

In recent weeks, investor anxiety over inflation, rising government bond yields and potential ripple effects from China Evergrande Group’s missed debt payments have sent major indexes oscillating.

The turbulence has left the S&P 500 up 17% in 2021, down from a year-to-date gain of 21% at its early-September record. The pullback has been exacerbated by retreats in shares of companies that said their results are coming under pressure.

After FedEx Corp. last month reported lower-than-expected earnings and cut its financial outlook, a company executive said the labor market was the biggest issue facing the delivery giant. Shares dropped 9.1% the following day and then ticked lower for six more sessions.

Nike Inc. shares fell 6.3% in the trading session after the sneaker company reported lower revenue than analysts had forecast. An executive told analysts that Nike had lost weeks of production in Vietnam because of Covid-19 lockdowns and that the time needed to transport goods from Asia to North America had doubled from before the pandemic.

Among smaller companies, Bed Bath & Beyond Inc. cited supply-chain problems, inflation and pandemic-inspired fears of in-person shopping when it reported a sharp decline in quarterly sales. Shares of the home-goods retailer plunged 22% that day.

SHARE YOUR THOUGHTS

What companies will you be keeping an eye on during this earnings season? Join the conversation below.

One bit of good news for many analysts and portfolio managers: The recent drawdown has helped stocks look less pricey. The S&P 500 traded Thursday at 20.6 times its projected earnings over the next 12 months, above a five-year average of 18.6 times but down from the 22.8 multiple it commanded at the end of last year.

While the volatility has disconcerted some investors, money managers note that it is normal for stocks to pull back. Kimberly Woody, senior portfolio manager at Globalt Investments, said she has been getting calls from clients about moves of a few percentage points.

“It speaks to the complacency out there and this idea that the stock market is kind of an ATM machine,” she said. “The volatility, it’s picked up, but it’s nothing compared to what we have seen in the past.”

Write to Karen Langley at [email protected]

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

TAGGED:MarketsPAIDWall Street Publication
Share This Article
Twitter Email Copy Link Print
Previous Article Kim Kardashian West pokes fun at famous family as SNL host Kim Kardashian West pokes fun at famous family as SNL host
Next Article Big U.S. Retailers Charter Private Cargo Ships Amid Port Delays Big U.S. Retailers Charter Private Cargo Ships Amid Port Delays

Editor's Pick

New Council of Financial Advisors report finds tariffs not inflicting inflation

New Council of Financial Advisors report finds tariffs not inflicting inflation

Former Trump administration head of financial coverage Tomas Philipson discusses President Trump’s commerce talks with South Korea and Japan, present…

By Editorial Board 4 Min Read
NBA Summer time League takeaways: Warriors rookie Will Richard makes debut vs. Spurs
NBA Summer time League takeaways: Warriors rookie Will Richard makes debut vs. Spurs

Richard makes debut SAN FRANCISCO – The Warriors‘ acquisition of their three…

5 Min Read
Moriah Plath Reveals Complete Hair Loss Attributable to Alopecia
Moriah Plath Reveals Complete Hair Loss Attributable to Alopecia

Studying Time: 3 minutes Moriah Plath is clearing the air, as a…

5 Min Read

Oponion

Trump takes one other shot at making his 34 felony convictions go away

Trump takes one other shot at making his 34 felony convictions go away

In Donald Trump’s function as president, he’s busy attempting to…

June 12, 2025

Gas-Station ATMs Are a Banking Battleground

Dozens of banks had rejected Ann…

February 19, 2022

Trump says Mexico will cease circulation of unlawful immigrants

President-elect Trump mentioned he spoke with…

November 28, 2024

Alzheimer’s Drug Slows Disease Progression in Trial

Eisai Co. and Biogen Inc. said…

September 27, 2022

8 Finest Colognes For Older Males That Cater To Any Age in 2024 | Fashion

We independently consider all beneficial merchandise…

October 30, 2024

You Might Also Like

Copper costs hit document excessive after Trump declares 50% import tariff
Markets

Copper costs hit document excessive after Trump declares 50% import tariff

President Donald Trump introduced his administration will impose a 50% tariff on imported copper, marking a brand new ecalation in…

4 Min Read
Tesla shares slide after Musk declares new political transfer
Markets

Tesla shares slide after Musk declares new political transfer

FOX Enterprise’ Stuart Varney analyzes President Donald Trump and former DOGE head Elon Musk’s relationship after Musk’s public criticism of…

6 Min Read
Nvidia CEO sells M value of inventory as a part of deliberate sale
Markets

Nvidia CEO sells $15M value of inventory as a part of deliberate sale

Zor Capital Funding Advisory consultant Joe Fahmy discusses the technical indicators that predict inventory market momentum on Making Cash. Nvidia CEO Jensen…

3 Min Read
Ford recollects over 130,000 Lincoln Aviators because of threat of elements detaching whereas driving
Markets

Ford recollects over 130,000 Lincoln Aviators because of threat of elements detaching whereas driving

Ford is leveraging its dealership empire to revamp how company America helps charities. Ford Motor Firm is recalling greater than…

3 Min Read
The Wall Street Publication

About Us

The Wall Street Publication, a distinguished part of the Enspirers News Group, stands as a beacon of excellence in journalism. Committed to delivering unfiltered global news, we pride ourselves on our trusted coverage of Politics, Business, Technology, and more.

Company

  • About Us
  • Newsroom Policies & Standards
  • Diversity & Inclusion
  • Careers
  • Media & Community Relations
  • WP Creative Group
  • Accessibility Statement

Contact

  • Contact Us
  • Contact Customer Care
  • Advertise
  • Licensing & Syndication
  • Request a Correction
  • Contact the Newsroom
  • Send a News Tip
  • Report a Vulnerability

Term of Use

  • Digital Products Terms of Sale
  • Terms of Service
  • Privacy Policy
  • Cookie Settings
  • Submissions & Discussion Policy
  • RSS Terms of Service
  • Ad Choices

© 2024 The Wall Street Publication. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?