The earnings reporting season is nearing, and technology and banking companies are expected to report strong quarterly results, according to a group of analysts and market experts.
With the exception of tax benefits, second-quarter earnings for tech companies are expected to rise by 19.9 percent in S&P 500, according to studies by some US banks. On the other hand, profits in the financial sector are expected to grow by 10.8%.
Including tax benefits, technology and financial companies are expected to achieve profits of 23.2% and 22.5%, respectively. This will be a decrease from the first quarter, when profits in technology and financial sectors grew by 33.97% and 26.89% respectively.
Technology stocks are heading into the earnings season with a 14% profit this year, the best gain from all S&P 500 sectors. Investors continue to trade on names of large technology companies such as Facebook, Alphabet and Apple, all of which rose more than 10% in 2018.
Meanwhile, financial data fell 2.3% this year, as interest rates remained limited amid growing trade tensions and fears of a US-China trade war.
The biggest gains are expected from the energy and raw materials sectors. With the exception of taxes, analysts estimate that energy profit in the second quarter grew by 128.3 percent, while a 30.5 percent increase in raw material profits. However, both sectors face easy yearly comparisons.
Analysts generally expect this earnings season to be strong. Analysts also forecast earnings growth of 20% in the second quarter on an yearly basis. This would follow 24% growth in first quarter earnings.
Senior US equity experts at Credit Suisse said earnings estimates rose modestly at the start of the season, by almost 2 percent. They also said the dollar’s 5 percent year-on-year decline should add around 0.6 percent to second-quarter earnings growth.
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