Second quarter earnings season is coming to a close, and with nearly all of the reports in, the results have been mostly positive. As of Aug. 29, 98% of S&P 500 index companies have reported results, according to FactSet data, and analysts now expect S&P 500 companies to report an 11.9% jump in earnings per share during the second quarter. Companies had lower expectations to clear coming into the quarter — analysts expected S&P 500 earnings to rise 5% in Q2, the slowest pace of earnings growth since Q4 2 ...

Economic Overview - Q2 GDP improved to +3.3%, marking the best growth in nearly two years, with a 30 basis points increase from the initial print and 20 basis points above expectations [2] - Consumption rose to +1.6%, the best quarter since Q4 of the previous year [2] - The Pricing Index remained unchanged at +2.0%, down from +3.8% in Q1, indicating cooling inflation [3] - Core Pricing reached +2.5%, 100 basis points lower quarter over quarter [3] - Inventories decreased to -3.3% in Q2 from +2.6% in Q1, while Net Trade improved to +5% this quarter from -4.6% last quarter [3] Job Market Insights - Initial Jobless Claims were reported at 229K, slightly below the expected 230K, marking the eighth downward shift since June [4] - Continuing Claims stood at 1.954 million, down from the revised 1.961 million, remaining above 1.94 million for 12 consecutive weeks [5] Earnings Reports - Dollar General (DG) reported earnings of $1.86 per share, exceeding estimates by +19.23%, with revenues of $10.73 billion, a +0.47% beat, and raised guidance [6] - Best Buy (BBY) posted earnings of $1.28 per share, surpassing expectations by +4.9%, with comparable sales turning positive at +1.5% [7] - Dick's Sporting Goods (DKS) reported earnings of $4.38 per share, exceeding estimates by +2.1%, and raised future guidance despite a recent acquisition miss [8] - Burlington Stores (BURL) saw earnings of $1.59 per share, beating consensus by +25%, with revenues of $2.71 billion, a +2.5% beat [10] Market Expectations - Pending Home Sales for July are expected to bounce back to +0.3% from -0.8% the previous month, following a year-over-year decline of -2.8% in June [11] - Major companies such as Marvell Technologies, Dell Technologies, and Ulta Beauty are set to report Q2 earnings later in the day [12]

Economic Indicators - Initial Jobless Claims rose to 235K, exceeding expectations by 10K and increasing by 11K from the previous week, marking the highest level since June [2] - Continuing Claims approached 2 million, reported at 1.972 million, the highest since November 2021 [2] - The Philly Fed Manufacturing survey showed a negative reading of -0.3, significantly lower than the expected 7.0 and the previous month's 15.9, indicating a decline in manufacturing output [3] - New Orders fell to -1.9, a decrease of 20 points month over month, while Shipments remained positive at 4.5 [3] Company Earnings - Walmart reported Q2 earnings of 68 cents per share, slightly below the Zacks consensus by 5 cents and only a penny above the previous year's earnings, with revenues of $177.4 billion, surpassing estimates by 1% [4] - Walmart revised its revenue guidance higher for the full fiscal year despite the mixed results [4] Market Expectations - Flash S&P Services and Manufacturing PMI for August are anticipated to cool down, with Services expected at 55.0 and Manufacturing at 49.5 [5] - Existing Home Sales for July are projected to decrease to 3.91 million annualized units from 3.93 million the prior month [6] - U.S. Leading Economic Indicators (LEI) are expected to improve to -0.1% for July from -0.3% in June [6] Upcoming Earnings Reports - Earnings season continues with companies like Zoom Communications, Workday, Ross Stores, and Intuit expected to report quarterly earnings, with Intuit projected to achieve a year-over-year earnings growth of 33% [7]

Core Viewpoint - The second-quarter earnings season is concluding, with over 90% of S&P 500 companies reporting results, and the retail sector is prominently featured this week [1] Company Performance: Home Depot - Home Depot reported its second consecutive earnings miss, with adjusted EPS of $4.68 compared to expectations of $4.71, reflecting a 0.64% miss, and total revenues of $45.28 billion versus $45.51 billion, a 0.5% miss [6] - The company experienced a 0.86% increase in net income year-over-year and a 4.9% increase in revenues compared to the second quarter of 2024 [6] - Comparable sales increased by 1.0%, with U.S. comparable sales rising by 1.4%, although foreign exchange rates negatively impacted total comparable sales by approximately 40 basis points [7] - Home Depot reaffirmed its guidance for total sales growth of approximately 2.8% for the fiscal year, with comparable sales growth of 1.0% and an expected adjusted EPS decline of 2% to $15.24 [9] - The company is facing challenges from elevated interest rates and a slowdown in the home improvement sector, which has seen reduced demand due to high mortgage rates and rising home prices [4][10] Industry Context: Home Improvement Sector - The home improvement sector is currently ranked in the bottom 16% of approximately 250 Zacks Ranked Industries, with most stocks considered overvalued and expected to experience below-average earnings growth [3] - The sector has been adversely affected by a broader operating environment characterized by high interest rates and weak discretionary spending, leading to a slowdown in large-scale home remodeling projects [4] - Despite the challenges, the aging housing stock and rising home equity levels are expected to support long-term demand in the home improvement market [18] Upcoming Performance: Lowe's - Lowe's is expected to report second-quarter earnings of $4.24 per share, a 3.41% improvement year-over-year, with revenues anticipated to climb 1.47% to $23.93 billion [12][15] - The company has not missed earnings estimates since 2019 and has a trailing four-quarter average earnings surprise of 3.22% [13] - Lowe's has expanded its reach to larger professional customers through the acquisition of Artisan Design Group, which is expected to enhance its capabilities in new home construction and large-scale renovation projects [16]

S&P 500 companies trounced expectations this earnings season after they found ways to blunt the impact of tariffs and benefitted from a weaker dollar, according to Goldman strategists https://t.co/DxdfdQVdhP ...

Earnings Performance - S&P 500 companies' top- and bottom-line results are significantly exceeding expectations [1]

Core Insights - Petrobras (PBR) reported second-quarter earnings per ADS of 64 cents, missing the Zacks Consensus Estimate of 70 cents due to lower downstream production and a decline in realized oil prices [1][10] - Consolidated net income was $4,101 million, down from $5,394 million a year earlier, while adjusted EBITDA fell to $9,242 million from $9,627 million [2] - Revenues for the quarter totaled $21,037 million, a 10.4% decrease from $23,467 million year-over-year, slightly missing the Zacks Consensus Estimate of $21,040 million [2] Upstream Segment - Average oil and gas production reached 2,909 thousand barrels of oil equivalent per day (MBOE/d), an increase from 2,699 MBOE/d in the same period of 2024 [4] - Brazilian oil and natural gas production improved by 8.1% to 2,879 MBOE/d, driven by ramp-up of existing fields and the startup of FPSO Alexandre de Gusmao [4] - The average sales price of oil fell over 20% year-over-year to $67.82 per barrel, negatively impacting upstream unit sales and revenues, which declined to $14,404 million from $15,668 million [5] - The upstream segment recorded a net income of $3,974 million, down 24.1% from $5,237 million in the second quarter of 2024 due to increased pre-salt lifting costs [6] Downstream Segment - Revenues from the downstream segment totaled $19,795 million, a 10.3% decrease from $22,061 million year-over-year, attributed to lower production volumes [7] - The downstream unit's profit fell to $217 million from $279 million in the second quarter of 2024, impacted by higher operating costs [7] Costs and Financial Position - Sales, general and administrative expenses were $1,750 million, a 3.7% decrease from the previous year, while selling expenses rose to $1,286 million [8] - Total operating expenses decreased by 7.2%, but the decline in revenues led to a drop in operating income to $5,349 million from $6,705 million year-over-year [8] - Capital investments totaled $4,431 million, up from $3,393 million in the prior-year quarter, with positive free cash flow of $3,445 million, down from $6,148 million [11] - Net debt increased to $58,563 million from $46,160 million a year ago, with cash and cash equivalents at $6,996 million [12]

Group 1: Earnings Performance - The S&P 500 Index reported an 81% positive surprise rate with 70% of companies showing positive growth, resulting in an aggregate growth rate of 11.4% for the second quarter [1] - Q1 estimates started at $63, fell to $60, and then rose to $64.50, while Q2 estimates began at $67, dropped to $63, and returned to $67 with actual results [2] - The weak U.S. dollar and continued pricing power due to elevated inflation contributed positively to earnings, with future quarterly estimates showing improvement [3] Group 2: Market Reactions and Analyst Predictions - Analysts had prematurely trimmed estimates for Q1 and Q2, underestimating corporations' ability to navigate uncertainty and protect profit margins [4] - The impact of tariffs on companies has been less significant than anticipated, with many companies managing to absorb costs and maintain margins [6][7] - A similar trend of falling estimates followed by actual results beating expectations was observed in Canada, with the TSX up 14.4% this year [8] Group 3: Sector Analysis - The TSX is trading at 16.3x consensus earnings for the next 12 months, the highest valuation since early 2021, raising questions about its sustainability given the sluggish housing market and tariff impacts [9] - Gold stocks have significantly contributed to the TSX's gains, with gold miners expected to grow earnings by $7.7 billion over the next year [9][10] - The reliance on gold for future earnings growth may pose risks for the TSX, as cyclical earnings typically carry lower valuation multiples [10][11]

>> Welcome back. S&P is coming off its best week since late June. Stocks are mixed as the market tries to add to some of those gains, as investors look ahead to some key data that's on deck later this week.Citi's U.S. Equity strategist, Scott Krone, is with us this morning. Just raised his target to 6600 from 6300. Happy Monday, Scott.Good to have you. >> Good morning Carl. >> Is this about an earnings season that's come in pretty strong. >> It's about earnings season that's coming pretty strong.The differe ...

Group 1 - The overall earnings picture for Q2 remains strong and resilient, with an improving outlook for the current and upcoming quarters, particularly in the Tech sector [1][9] - A significant proportion of companies have exceeded Q2 EPS and revenue estimates, with 80.4% beating EPS estimates and 79.1% beating revenue estimates [3][10] - Total earnings for reported S&P 500 companies are projected to reach $582 billion for Q2, marking a new all-time quarterly record [14][12] Group 2 - The earnings growth rate for the S&P 500 is expected to be up +12.1% year-over-year, with a +6.2% increase in revenues when combining actual results and estimates [10][9] - The revisions trend has turned positive, especially for the Tech sector, with Q3 earnings expected to grow by +10.4% year-over-year [14][17] - Since the start of July, Q3 estimates have increased for 6 of the 16 Zacks sectors, with the most significant gains in the Tech, Finance, Energy, and Retail sectors [16]