The earnings season for Q1 has had a strong start, with banking giant JP Morgan (NYSE: JPM) posting record revenue and earnings for the March quarter. The banking giant reported revenue of $39.34 billion and adjusted earnings of $4.32 per share in Q1. Comparatively, Wall Street forecast revenue of $36.19 billion and earnings of $3.41 per share in the quarter.
JPMorgan also surprised Wall Street by increasing its net interest income forecast by $7 billion to $18 billion in 2023.
Wall Street futures are ticking higher today, with investors keeping an eye on the health of corporate America ahead of a crucial earnings week. Futures tied to the S&P 500 gained 0.2%, while Nasdaq-100 futures added 0.1%. Dow Jones Industrial Average futures also ticked up 49 points, or 0.14%, at the time of writing.
Let’s see what investors should expect from the stock market in the upcoming week.
S&P 500 earnings season under the radar
This week is a big one for earnings reports, with financial giants including Charles Schwab (NYSE: SCHW), Bank of America (NYSE: BAC), and Morgan Stanley (NYSE: MS) reporting Q1 results on Monday, Tuesday, and Wednesday, respectively. Other notable names outside of financials include Tesla (NASDAQ: TSLA), Netflix (NASDAQ: NFLX), and Procter & Gamble (NYSE: PG), which are scheduled to report second-quarter earnings this week.
Corporate earnings got off to a positive start last week, as Wells Fargo and JPMorgan Chase beat expectations. However, discouraging retail sales data showing a slowdown in consumer spending by 1% in March pulled markets lower on Friday.
However, stocks remained resilient last week, with the Dow positive overall for the fourth straight week and the S&P 500 and Nasdaq Composite both having their fourth week in the green in the last five weeks.
U.S. Treasury Secretary Janet Yellen thinks banks could become more restrictive with lending, which could allow the Fed to stop hiking interest rates. Yellen told CNN on Saturday that the threat of further fallout from the collapse of Silicon Valley Bank has been sustained thanks to successful policy actions, while outflows have substantially stabilized.
“Banks are likely to become somewhat more cautious in this environment,” Yellen said. “We already saw some tightening of lending standards in the banking system prior to that episode, and there may be some more to come.” If more tightening comes to fruition, Yellen added, such action could serve as “a substitute for further interest rate hikes that the Fed needs to make.”
Housing market updates and China’s growth
We'll also get updates on the housing market next week, including March housing starts, building permits, and existing home sales, and the NAHB's Housing Market Index for April. The U.S. housing market could be experiencing a rebound after a sharp slowdown in 2022 amid slowing annual price gains and a pullback in mortgage rates.
China will issue first-quarter gross domestic product (GDP) figures on Monday. China's economy likely expanded 2.2% in the first quarter, or 4% year-over-year, after recording no growth in the previous quarter. For all of 2023, the economy is projected to grow 5.4% after expanding just 3% last year in what was the slowest expansion in decades.
As we head into another busy week of earnings and economic data releases, it's important to keep an eye on the global economy and its impact on the markets. Stay tuned for updates and analysis throughout the week.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
