U.S. Stocks: April-June Earnings Season Outlook
2025-07-11
■ The S&P 500's earnings per share (EPS) are expected to grow by 5.8% year-on-year, and market expectations have been lowered.
■ The current stock price is at a warning level of high valuation, and it is expected to fluctuate within a high range in the short term.
The United States will officially enter the 2024 April-June earnings season for major companies, starting with large financial institutions, on July 15. In the third week (July 14-18), large U.S. financial institutions, U.S. streaming giants, Taiwan's semiconductor foundry leaders, and Dutch semiconductor equipment giants will release their earnings reports. The fourth week (July 21-25) will see large technology, semiconductor, and electric vehicle leaders; the fifth week (July 28-August 1) will feature aircraft manufacturers, semiconductor leaders, and smartphone giants; and the first week of August (August 4-8) will be the concentrated period for e-commerce platforms and some semiconductor giants to announce their performances. By then, six of the so-called "Magnificent Seven (M7)" companies will release their earnings reports, marking a phased peak in the earnings season. Semiconductor companies and the largest retailers will continue releasing financial reports in the second week (August 11-15) and the third week (August 18-22). On August 27, the last remaining semiconductor giant in M7 will disclose its results.
As of July 3, the forecast price-to-earnings ratio (PER) of the S&P 500 for the next year was 22.2 times, close to the 22.4 times level in February and significantly higher than the average of 19.1 times since 2018. This indicates that current stock prices should alert investors to the risk of high valuations. Thanks to steady growth in demand for artificial intelligence (AI), the information technology (IT) and communications services sectors have led the market. Additionally, the US government's policies promoting manufacturing revival (such as the capital goods sector) and relaxing regulations (like the financial industry) have also contributed to strong performance in related sectors. Investors have gradually understood the US strategy in foreign trade negotiations, and market sentiment remains optimistic as tariffs have yet to significantly impact the real economy. Furthermore, the tax cut and spending bill officially passed on July 4 made the current tax policy permanent, avoiding substantial tax increases. Simultaneously, the federal debt ceiling increase of $5 trillion boosted market confidence, serving as another driver for the stock market's rise.
According to data compiled by financial information company LSEG I/B/E/S on July 3, the earnings per share (EPS) of S&P 500 companies in the April-June quarter of 2024 is expected to increase by 5.8% year-on-year, a notable slowdown from the 13.7% growth rate in January-March. Data from the U.S. Treasury Department shows that tariff revenue has increased significantly since April, and the market has started to reflect expectations that tariffs will lead to higher costs, lower profit margins, and negatively impact corporate performance. The full-year EPS growth forecast for 2025 has been lowered from 10.5% in early April to 8.5%. If trade negotiations continue to be deadlocked, corporate earnings prospects will remain under pressure, making it unwise to chase too high at this time. However, it is believed that the U.S. will not enter a recession but rather experience a temporary economic slowdown, which limits the scope for significant stock price corrections. Even if the rally pauses, stock prices are expected to continue fluctuating within a high range and gradually trend upward once trade uncertainties ease.
■ The current stock price is at a warning level of high valuation, and it is expected to fluctuate within a high range in the short term.
The United States will officially enter the 2024 April-June earnings season for major companies, starting with large financial institutions, on July 15. In the third week (July 14-18), large U.S. financial institutions, U.S. streaming giants, Taiwan's semiconductor foundry leaders, and Dutch semiconductor equipment giants will release their earnings reports. The fourth week (July 21-25) will see large technology, semiconductor, and electric vehicle leaders; the fifth week (July 28-August 1) will feature aircraft manufacturers, semiconductor leaders, and smartphone giants; and the first week of August (August 4-8) will be the concentrated period for e-commerce platforms and some semiconductor giants to announce their performances. By then, six of the so-called "Magnificent Seven (M7)" companies will release their earnings reports, marking a phased peak in the earnings season. Semiconductor companies and the largest retailers will continue releasing financial reports in the second week (August 11-15) and the third week (August 18-22). On August 27, the last remaining semiconductor giant in M7 will disclose its results.
As of July 3, the forecast price-to-earnings ratio (PER) of the S&P 500 for the next year was 22.2 times, close to the 22.4 times level in February and significantly higher than the average of 19.1 times since 2018. This indicates that current stock prices should alert investors to the risk of high valuations. Thanks to steady growth in demand for artificial intelligence (AI), the information technology (IT) and communications services sectors have led the market. Additionally, the US government's policies promoting manufacturing revival (such as the capital goods sector) and relaxing regulations (like the financial industry) have also contributed to strong performance in related sectors. Investors have gradually understood the US strategy in foreign trade negotiations, and market sentiment remains optimistic as tariffs have yet to significantly impact the real economy. Furthermore, the tax cut and spending bill officially passed on July 4 made the current tax policy permanent, avoiding substantial tax increases. Simultaneously, the federal debt ceiling increase of $5 trillion boosted market confidence, serving as another driver for the stock market's rise.
According to data compiled by financial information company LSEG I/B/E/S on July 3, the earnings per share (EPS) of S&P 500 companies in the April-June quarter of 2024 is expected to increase by 5.8% year-on-year, a notable slowdown from the 13.7% growth rate in January-March. Data from the U.S. Treasury Department shows that tariff revenue has increased significantly since April, and the market has started to reflect expectations that tariffs will lead to higher costs, lower profit margins, and negatively impact corporate performance. The full-year EPS growth forecast for 2025 has been lowered from 10.5% in early April to 8.5%. If trade negotiations continue to be deadlocked, corporate earnings prospects will remain under pressure, making it unwise to chase too high at this time. However, it is believed that the U.S. will not enter a recession but rather experience a temporary economic slowdown, which limits the scope for significant stock price corrections. Even if the rally pauses, stock prices are expected to continue fluctuating within a high range and gradually trend upward once trade uncertainties ease.