Investors will spend the next three weeks scrutinizing the earnings reports from earnings season. But this season will tell a bit of a different story from the rest. With some industrials getting punished for growing their sales below analyst expectations and others still growing sales, investors are more likely to focus on which companies continue to deliver robust results and which are struggling to boost growth. They’ll also keep an eye on this: Optimism seems to be gaining steam in the final quarter of the year after investors become heartened by stronger economic data and Trump’s victory.
The big investment banks to watch are Morgan Stanley and Goldman Sachs, which are seen to be models of conservatism, particularly on stock prices. But Goldman’s profit was hurt last quarter as weak trading prices dragged on both trading and investment banking revenue.
Morgan Stanley is a less hard-nosed investor, and also had a down quarter. But many analysts are waiting for it to post a first-quarter beat, after setting up expectations more modestly. The bank plans to announce earnings on Oct. 16, when its earnings call is scheduled.
After all, some companies are facing either an extraordinarily high bar to clear, or they’re fighting to grow for the first time in years. Thanks to hopes that Trump will boost infrastructure spending, production rose at most big companies in July and August. General Electric, the industrial conglomerate, issued a dire warning on last week’s earnings call about how difficult the current environment is. “We know we can’t keep going down from here,” Chief Executive Jeff Immelt said. GE announced on Friday that it would eliminate 18,000 jobs as it cuts spending on new equipment.