By using this site, you agree to the Privacy Policy and Terms of Use.
Accept

News Junction

Notification Show More
Font ResizerAa
  • Home
  • World News
    World NewsShow More
    Canada summons Israel’s ambassador after diplomats fired at in West Bank – National
    Canada summons Israel’s ambassador after diplomats fired at in West Bank – National
    May 22, 2025
    Kim Kardashian dons a graduation cap and marches closer to becoming a lawyer
    Kim Kardashian dons a graduation cap and marches closer to becoming a lawyer
    May 22, 2025
    Josh Hawley blasts Allstate CEO for making M last year — while company can’t ‘afford’ to pay out claims
    Josh Hawley blasts Allstate CEO for making $26M last year — while company can’t ‘afford’ to pay out claims
    May 22, 2025
    US Army to change transgender soldiers’ records to birth sex
    US Army to change transgender soldiers’ records to birth sex
    May 21, 2025
    UK escalates action against Israel over Gaza offensive
    UK escalates action against Israel over Gaza offensive
    May 21, 2025
  • Business
    BusinessShow More
    Ukraine blows up bridges to consolidate its positions in Russia
    Ukraine blows up bridges to consolidate its positions in Russia
    August 18, 2024
    Commentary: AI phones from Google and Apple will erode trust in everything
    Commentary: AI phones from Google and Apple will erode trust in everything
    August 18, 2024
    The most famous Indian Dishes – Insights Success
    The most famous Indian Dishes – Insights Success
    August 18, 2024
    Life on the road as a female long rides cyclist
    Life on the road as a female long rides cyclist
    August 18, 2024
    UK inflation rises to 2.2%
    UK inflation rises to 2.2%
    August 18, 2024
  • Cryptocurrency
    CryptocurrencyShow More
    US Emerges As Bitcoin Superpower With 40% Ownership: Research
    US Emerges As Bitcoin Superpower With 40% Ownership: Research
    May 22, 2025
    Trump’s Memecoin Dinner Draws Crowded Cast of Democratic Protesters from Congress
    Trump’s Memecoin Dinner Draws Crowded Cast of Democratic Protesters from Congress
    May 22, 2025
    BTC, ETH, XRP, BNB, SOL, DOGE, ADA, SUI, LINK, AVAX
    BTC, ETH, XRP, BNB, SOL, DOGE, ADA, SUI, LINK, AVAX
    May 22, 2025
    Bitcoin price hit a new all-time high and data shows BTC bulls aren’t done yet
    Bitcoin price hit a new all-time high and data shows BTC bulls aren’t done yet
    May 22, 2025
    Bank lobby is ‘panicking’ about yield-bearing stablecoins — NYU professor
    Bank lobby is ‘panicking’ about yield-bearing stablecoins — NYU professor
    May 22, 2025
  • Technology
    TechnologyShow More
    How to Improve Your Spotify Recommendations
    How to Improve Your Spotify Recommendations
    August 18, 2024
    X says it’s closing operations in Brazil
    X says it’s closing operations in Brazil
    August 18, 2024
    Supermoon set to rise: Top tips for amateur photographers | Science & Tech News
    Supermoon set to rise: Top tips for amateur photographers | Science & Tech News
    August 18, 2024
    Scientists Want to See Videos of Your Cat for a New Study
    Scientists Want to See Videos of Your Cat for a New Study
    August 18, 2024
    OpenAI’s new voice mode let me talk with my phone, not to it
    OpenAI’s new voice mode let me talk with my phone, not to it
    August 18, 2024
  • Entertainment
  • Sports News
  • People
  • Trend
Reading: Earnings Derail Stock Rally Over Doubts on AI, Consumer Strength
Share
Font ResizerAa

News Junction

  • World News
  • Business
  • Technology
  • Cryptocurrency
  • Trend
  • Entertainment
Search
  • Recent Headlines in Entertainment, World News, and Cryptocurrency – NewsJunction
  • World News
  • Business
  • Cryptocurrency
  • Technology
  • Entertainment
  • Sports News
  • People
  • Trend
Have an existing account? Sign In
Follow US
News Junction > Blog > Business > Earnings Derail Stock Rally Over Doubts on AI, Consumer Strength
Earnings Derail Stock Rally Over Doubts on AI, Consumer Strength
Business

Earnings Derail Stock Rally Over Doubts on AI, Consumer Strength

Published July 27, 2024
Share
6 Min Read
SHARE

(Bloomberg) — The latest earnings reports are fanning two worries that were already gnawing away at the US stock market: That the euphoria about artificial intelligence had run too far and that — at some point — consumers spending will start to stall.

Most Read from Bloomberg

While profits overall are still expanding at a solid pace and banks’ earnings have continued to swell, those concerns have derailed a stock-market rally that until this month kept pushing major indexes to fresh record highs.

The Nasdaq 100 Index slid 2.6% in its third straight weekly loss after Alphabet Inc.’s results stoked a broader concern about how long it will take for investments in artificial intelligence to pay off. At the same time, updates from Southwest Airlines Co., United Parcel Service Inc., Whirlpool Corp. stoked worries about a potential pullback by consumers.

That’s heightened the stakes as earnings continue to roll out next week, including those from the tech bellwethers Microsoft Corp., Meta Platforms Inc., Amazon.com Inc. and Apple Inc.

“The setup for the next week is the bar is as high as it’s ever been and the headwinds are as strong as they’ve ever been,” said Max Gokhman, senior vice president at Franklin Templeton Investment Solutions.

The sentiment is a shift from what held sway during much of this year, when optimism about soft landing in the economy and investor obsession with all things artificial intelligence pushed the S&P 500 into 38 records.

The direction of the economy has remained well intact, with recent data showing solid economic growth and easing inflationary pressure. That bolstered bets that the Federal Reserve will start cutting rates sooner than expected, fueling gains in small-cap stocks that generally have a higher debt burden.

To be sure, there have been plenty of bright spots in the earnings picture. About 69% of companies in the S&P 500 that have already posted their results reported higher per-share earnings than a year ago, data compiled by Bloomberg Intelligence as of Friday morning show. And banks surpassed the sell-side’s expectations, while a profit squeeze for industrial companies may be coming to an end.

Moreover, those that posted disappointing figures have generally not been severely punished, at least so far. Companies in the S&P 500 that have trailed projections on both earnings per share and sales have underperformed the broader S&P 500 Index by an average of 1.6% within a day of reporting, the least since 2017, according to data compiled by Bloomberg Intelligence.

Banks surpassed the sell-side’s expectations, and a profit squeeze for industrial companies may be coming to an end.

But the scale of the market’s run up this year has left some investors wary, particularly when it comes to the big technology companies. With Alphabet, Microsoft, Meta and Amazon.com Inc. all investing heavily in the promise of artificial intelligence technology, investors are increasingly questioning how much it will pay off.

The Google parent reported sales and cloud revenue that beat expectations. At the same time, capital spending rose to $13.2 billion in the second quarter, exceeding Wall Street’s estimates.

“It really feels like we are moving from a ‘tell me’ story on AI to a ‘show me’ story,” said Ohsung Kwon, equity and quantitative strategist at Bank of America Corp. “We are basically at a point where we’re not seeing much evidence of AI monetization yet.”

With weeks still to go before major US retailers roll out their earnings, early reports have indicated consumers are continuing to feel the pinch of high interest rates and still elevated inflation, particularly in the low-income category. Second quarter EPS growth in both consumer staples and consumer discretionary sectors is sitting at the lowest level in two years.

Whirlpool lowered its full-year earnings forecast, as consumers continued to shy away from big-ticket appliance purchases amid a weakening housing market. Shares of a frozen potato supplier Lamb Weston Holdings Inc. sank by the most on record on Wednesday as earnings and guidance missed analysts’ expectations.

American Airlines Group Inc. and UPS trimmed earnings forecasts for the year. United Airlines Holdings Inc.’ EPS came ahead of consensus estimates, but the carrier said profit expectations for the third quarter would fall short of Wall Street’s expectations.

Matt Maley, chief market strategist at Miller Tabak + Co. said the UPS and airline results raise “concerns about how strong the economy is.”

“And if people are shipping less,” he said, “then it tells a lot about weakness in trade.”

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.

#Earnings #Derail #Stock #Rally #Doubts #Consumer #Strength

TAGGED:Amazon.com IncArtificial intelligenceBloombergconsumerDerailDoubtsearningsearnings reportsFranklin Templeton Investment SolutionsMeta Platforms IncrallySouthwest Airlines Co.StockstrengthWhirlpool Corp
Share This Article
Facebook Twitter Pinterest Whatsapp Whatsapp LinkedIn Email Copy Link Print
Share
What do you think?
Love0
Sad0
Happy0
Sleepy0
Angry0
Dead0
Wink0
Previous Article SOL shorts suffer as price surges; Solana’s Poodlana hits  million milestone SOL shorts suffer as price surges; Solana’s Poodlana hits $3 million milestone
Next Article Paris 2024 Olympics: Organisers respond to offended reactions to opening ceremony | World News Paris 2024 Olympics: Organisers respond to offended reactions to opening ceremony | World News
- Advertisement -

Latest Post

US Emerges As Bitcoin Superpower With 40% Ownership: Research
US Emerges As Bitcoin Superpower With 40% Ownership: Research
Cryptocurrency
Canada summons Israel’s ambassador after diplomats fired at in West Bank – National
Canada summons Israel’s ambassador after diplomats fired at in West Bank – National
World News
Kim Kardashian dons a graduation cap and marches closer to becoming a lawyer
Kim Kardashian dons a graduation cap and marches closer to becoming a lawyer
World News
Trump’s Memecoin Dinner Draws Crowded Cast of Democratic Protesters from Congress
Trump’s Memecoin Dinner Draws Crowded Cast of Democratic Protesters from Congress
Cryptocurrency
BTC, ETH, XRP, BNB, SOL, DOGE, ADA, SUI, LINK, AVAX
BTC, ETH, XRP, BNB, SOL, DOGE, ADA, SUI, LINK, AVAX
Cryptocurrency
Josh Hawley blasts Allstate CEO for making M last year — while company can’t ‘afford’ to pay out claims
Josh Hawley blasts Allstate CEO for making $26M last year — while company can’t ‘afford’ to pay out claims
World News
- Advertisement -

You Might Also Like

Thank goodness we’ve reached peak MBA
Business

Thank goodness we’ve reached peak MBA

February 4, 2024
‘Uninvestable’: China’s tn stock rout leaves investors scarred
Business

‘Uninvestable’: China’s $2tn stock rout leaves investors scarred

February 4, 2024
How IT Consultants can Navigate the Digital Competition?
Business

How IT Consultants can Navigate the Digital Competition?

January 30, 2024
Business expert shares top tips SMEs can learn from the Barbie movie marketing team
Business

Business expert shares top tips SMEs can learn from the Barbie movie marketing team

July 27, 2023

About Us

NEWS JUNCTION (NewsJunction.xyz) Your trusted destination for global news. Stay informed with our timely and accurate reporting on diverse topics, including politics, technology, science, entertainment, sports, and more. Count on us for unbiased and reliable updates at your fingertips.

Quick Link

  • About
  • Disclaimer
  • Privacy Policy
  • Terms of Use
  • Contact

Top Categories

  • World News
  • Business
  • Technology
  • Entertainment
  • Cryptocurrency
  • Sports News
  • Trend
  • People

Subscribe

Subscribe to our newsletter to get our newest articles instantly!

    © 2023 News Junction.
    • Blog
    • Advertise
    • Contact
    Welcome Back!

    Sign in to your account

    Username or Email Address
    Password

    Lost your password?