The fourth-quarter earnings season picks up speed in the coming week, unperturbed by new leadership in Washington that could roil markets for weeks to come.
Wall Street initially rallied upon Donald Trump's unexpected win in November. However, goodwill evaporated in recent days as uncertainty grew over what changes to trade and foreign policy a Trump administration could bring. Markets are also notoriously fickle, often trading higher in the lead-up to big events and selling off on their reality.
The coming week, the first under Trump's leadership, should shed a little light on what markets can expect going forward. Trump and Republican officials have suggested that the repeal of the Affordable Care Act is high on the agenda, while Wilbur Ross, Trump's nominee for commerce secretary, has indicated the reopening of the North American Free Trade Agreement is also a top priority.
"A focus on rules of origin and dispute-settlement panels rather than punitive tariffs would be viewed positively, while greater detail on infrastructure spending and corporate tax reform plans would reinforce market sentiment as well," TD Securities analysts wrote in a note.
It's full-steam ahead for earnings with a major chunk of S&P 500 companies set to report on their recent quarters. So far, just 12% of S&P 500 companies have reported earnings and nearly 65% have beat profit estimates.
"Earnings are the catalyst needed to drive stock prices higher in the short term," Jeff Kravetz at U.S. Bank's Private Client Reserve told TheStreet. "E-commerce, technology and energy firms should do well in the upcoming earnings releases as we have turned the corner on the earnings recession with consumers and businesses showing higher levels of optimism on the incoming administration."
Average earnings for the S&P 500 in the fourth quarter are expected to increase 6.3% from the same period a year earlier, according to Thomson Reuters, as energy companies benefit from rising crude oil prices. Energy had been the biggest contributor to an earnings recession that lasted from the middle of 2015 to mid-2016. The recession was the longest since the financial crisis.
In tech earnings in the coming week, Yahoo! (YHOO) will report on Monday; Alibaba (BABA) , Seagate (STX) , Texas Instruments (TXN) and Verizon (VZ) on Tuesday; AT&T (T) , Citrix Systems (CTXS) , eBay (EBAY) , Qualcomm (QCOM) and Western Digital (WDC) on Wednesday; and Alphabet (GOOGL) , Microsoft (MSFT) , Intel (INTC) , PayPal (PYPL) and VMWare (VMW) on Thursday.
In consumer and health earnings, McDonald's (MCD) will report on Monday; Johnson & Johnson (JNJ) and Kimberly-Clark (KMB) on Tuesday; Bristol-Myers (BMY) , Biogen (BIIB) , Celgene (CELG) , JetBlue (JBLU) , Southwest (LUV) and Starbucks (SBUX) on Thursday; and AbbVie (ABBV) and Colgate-Palmolive (CL) on Friday.
Other earnings in the coming week include Halliburton (HAL) on Monday; 3M (MMM) , Alcoa (AA) , D.R. Horton (DHI) , DuPont (DD) and Lockheed Martin (LMT) on Tuesday; Boeing (BA) and Hess (HES) on Wednesday; Baker Hughes (BHI) , Blackstone (BX) , Dover (DOV) , Dow Chemical (DOW) , Ford (F) , Stanley, Black & Decker (SWK) and Unilever (UL) on Thursday; and Chevron (CVX) and Honeywell (HON) on Friday.
On the economic calendar in the coming week, existing home sales for December will be released on Tuesday; international trade and new home sales for December on Thursday; and durable goods orders for December and the final reading on consumer sentiment for January on Friday.