After an eventful week of corporate earnings, jobs numbers, and the latest FOMC meeting, next week’s lineup will be more subdued. Earnings season continues with reports from The Walt Disney Company, PepsiCo, Activision Blizzard, PayPal, Uber Technologies, and automakers Toyota and Honda, among others. On Friday, we’ll get the preliminary February reading of the University of Michigan’s Consumer Sentiment Index (MCSI), gauging consumer confidence in the U.S. Also on Friday, market watchers can expect fourth-quarter gross domestic product (GDP) figures from the U.K.
More Earnings On The Way
Earnings season continues next week with reports from The Walt Disney Company, Pepsi Company, Unilever, Activision Blizzard, and automakers Toyota and Honda, among others. Investors will be closely scrutinizing earnings from Disney, which is expected to post a 35% year-over-year decline in earnings despite higher revenue, with earnings per share (EPS) projected at $0.69. Revenue is projected at $23.33 billion, up 6.9% on an annual basis.
Of the 230 S&P 500 companies that have reported earnings so far, 70% have beat expectations, compared to a long-run average of 66%, according to an analysis by Refinitiv.1 The best-performing sectors have been energy and industrials, with blended earnings growth of 60.4% and 40.7%, respectively. Communication services and materials have been the biggest underperformers, reporting earnings declines of 24% and 20.3%, respectively.
Consumer Sentiment Update
The University of Michigan will release the preliminary February reading of its Consumer Sentiment Index (MCSI) on Friday, providing a timely update on consumer confidence. Economists are projecting a reading of 65, up slightly from 64.9 in late January. Consumer sentiment has improved in recent months as inflation has slowed markedly from 40-year highs last year. The MCSI hit an all-time low of 50 in June, surpassing the previous record lows set during the Great Recession and stagflationary era of the 1970s and early 1980s. Despite recent improvements, consumer sentiment could remain subdued in the coming months amid lingering recession fears and rising interest rates.
U.K. GDP Figures
The U.K.’s Office for National Statistics will release fourth-quarter GDP figures on Friday. The U.K. economy is projected to have stagnated after declining 0.3% in the previous quarter, as rising interest rates and persistently high inflation weigh on the economy. Year-over-year, GDP likely rose just 0.4%, decelerating from a 1.9% increase in the third quarter. The U.K. economy is projected to shrink 0.6% in 2023, according to the latest forecast from the International Monetary Fund (IMF). It is the only G-7 economy projected to contract this year.