With the U.S. fourth-quarter earnings reporting season almost halfway through, the financial industry is fretting over souring consumer credit. Companies that make shoes and clothes said retailers, still contending with shoppers banged up from inflation, were reluctant to buy their products. Others are announcing cost cuts and layoffs.
Big tech is bailing all of them out though.
On Jan. 19, around a week into the fourth-quarter earnings season, per-share profit for S&P 500 index companies overall was down 1.8%, according to a FactSet report on Friday. But on Friday — after results landed from Meta Platforms Inc. META, +20.32%, Amazon.com Inc. AMZN, +7.87%, Microsoft Corp., Alphabet Inc. GOOGL, +0.86% GOOG, +0.58% and Apple Inc. — those profits for the quarter were up 1.6%.
In the report, FactSet Senior Earnings Analyst John Butters said the more sluggish start to the earnings season was due to the number of banks and other financial firms reporting.
“At that point in time, nearly half (46%) of the companies that had reported actual results for the fourth quarter were in the financials sector. Companies in the financials sector, mainly in the banks industry, accounted for most of this below-average performance relative to estimates,” he said.
Between Dec. 31 and Jan. 19, the decrease in earnings for the financial sector steepened to 19.2%, the report said, but information technology companies — FactSet puts companies like Microsoft MSFT, +1.84%, Apple AAPL, -0.54% and Intel INTC, -1.75% under that category — played the biggest role in the rebound overall.
In keeping with the past year, demand for AI, and the longer-term potential of the technology, has driven the results for the technology industry.
This week in earnings
Of S&P 500 companies, 46% have reported quarterly results this earnings season, according to FactSet. For the week ahead, the firm said, 104 S&P 500 companies will report results, including four from the Dow. Among them are meat producer Tyson Foods Inc. TSN, -0.48%. Analytics and AI software company Palantir Technologies Inc. PLTR, +4.23% also reports, as some analysts question whether its stock price justifies the near-term financial benefits of AI.
Audio-streaming platform Spotify Technology SPOT, +1.60% will also publish its results, after announcing a new multi-year deal with podcast host Joe Rogan. Earnings from Mattel Inc. MAT, +4.11% are also on the way, as the toy-maker stares down life after the “Barbie” movie. PayPal Holdings Inc. PYPL, +0.64% releases earnings, as analysts determine the impact of big round of layoffs planned at the company.
Other companies set to report: PepsiCo Inc. PEP, -0.43%, Canopy Growth Corp. CGC, -7.75%, Ford Motor Co., F, +0.33%, Chipotle Mexican Grill Inc. CMG, +1.65%, Snap Inc. SNAP, +7.44% and Uber Technologies Inc. UBER, +2.01%.
The calls to put on your calendar
McDonald’s and boycotts: Following Hamas’ raid on Israel in October and Israel’s bombardment of Gaza, McDonald’s Corp. tried to avoid taking sides. It hasn’t exactly worked.
Calls for a boycott arose, after McDonald’s MCD, -0.35% restaurants in Israel handed out free meals to that nation’s soldiers, and Chief Executive Chris Kempczinski last month said the war and “associated misinformation” had weighed on business at the burger chain. When McDonald’s reports quarterly results on Monday, executives could provide more detail on the impact overall, after Starbucks Corp. SBUX, -0.41% said the conflict, and similar consumer pushback related to it, had hurt its own sales abroad and in the U.S.
McDonald’s also reports as some Wall Street analysts struggle to find the next big thing to drive its stock higher. And while they expect fast-food to get cheaper this year, it might still be more expensive than it has been historically.
Spirit Airlines: When a federal judge blocked the merger deal between JetBlue Airways Corp. and Spirit Airlines Inc. last month, the airlines appealed. Then, JetBlue JBLU, +2.87% warned that it might have to break off the deal, but that it still remained “in effect.” Now, as questions pile up about Spirit’s odds as a potential standalone carrier, we’ll hear more from the ultra-discount airline — about price-cutting competition, travel trends and efforts to firm up its finances — when it reports quarterly results on Thursday.
The numbers to watch
Disney streaming results: Walt Disney Co. reports results on Wednesday, and investor enthusiasm isn’t great. The multimedia and amusement-park giant’s stock is down 12% over the past 12 months. It’s fighting with activist investors pushing for stronger profit margins and fighting in court with Florida Gov. Ron DeSantis. And most crucially for some analysts, its streaming business — which includes Disney+, Hulu and ESPN+ — is losing money.
Disney has said it expects its streaming business to turn a profit in the fourth quarter this fiscal year, which is set to finish up around the end of September. But after expanding through the prior decade, the streaming industry is consolidating as it tries to find a way to make more money. And rival Netflix Inc.’s NFLX, -0.51% most recent quarter showed signs it was finding its footing.