![]() ![]() The upcoming tech earnings slump is “known information and the market will start to look forward to the 2024 earnings recovery in coming months,” Hayes said.Īrtificial intelligence developments could prove key, having already powered rallies at Nvidia Corp., Microsoft Corp. Thomas Hayes, chairman of Great Hill Capital, is among the investors looking to capitalize on short-term tech pullbacks. They said tech, media and telecoms’ earnings growth is expected to lag the broader index until 2024, leaving shares vulnerable. What’s more, tech comprises 35% of the S&P’s market-cap share, but just under 30% of earnings, analysts at Bloomberg Intelligence note. Still, sector earnings are expected to decline more than 7% in the second quarter. They are also benefiting from signs the Federal Reserve has stopped hiking rates. Technology firms were a first-quarter bright spot, with Apple Inc., Meta Platforms Inc., Google-parent Alphabet Inc. and Columbia Property Trust have already rocked the property sector, leaving the S&P 500 real estate index flat this year, bucking gains in the wider benchmark. High-profile mortgage defaults by companies such as Brookfield Corp. The problems could ripple into commercial real estate, according to Franklin Templeton Investments’ Chief Executive Officer Jenny Johnson, who noted that small banks account for 25% of the lending to this sector. “The fallout in smaller businesses as banks lending is greatly reduced could also show in financial markets as overall business activity slows, and also it should impact the consumer,” said Paul de la Baume, senior market strategist at FlowBank SA. ![]() Provisions soared, while smaller firms such as Lazard Ltd. As more Americans fall behind on payments, the four biggest US banks saw bad consumer loan write-offs rise 73% from year-ago levels. ![]() Morgan Stanley strategist Michael Wilson predicts “additional margin downside” over the coming months, with labor costs a major headwind and a softer economy crimping companies’ pricing power.īooming interest income, trading revenues and deposit inflows at the big banks enabled lenders’ earnings to largely shrug off March financial stress, with JPMorgan Chase & Co CEO Jamie Dimon declaring the crisis near an end.īut other headwinds loom. The impact should show up in the April-through-June period earnings. Companies have resorted to laying off workers, with tens of thousands of jobs culled across industries, from tech to retail. ![]()
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