As rising bond yields, labour shortages and sky-high commodity prices buffet stock markets, first-quarter U.S. earnings will give investors a chance to gauge balance sheet resilience, cost pressures on companies and share buyback plans.
Overall, S&P 500 earnings growth is expected at 6.8% in the Jan-March quarter, versus the 53% bounceback seen a year ago from COVID-time doldrums, according to Refinitiv IBES.
Big banks kick off the season with JPMorgan reporting on Wednesday, followed a day later by Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley.
Bank shares have fared badly this year, with 11% losses, versus the S&P 500’s 6%.
The six biggest lenders are projected to show a 35% decline in net income versus a year earlier. Investment bank revenues may have declined, especially after the Russian invasion of Ukraine, while some banks must make provisions for Russia-linked losses.
Finally, watch whether banks may curb share buybacks after seeing excess capital dented by Q1 losses on their bond holdings.