Investors are eager to see if technology companies and other key players will continue to boost profits as corporate America gears up to report on the final quarter of a strong year for Wall Street. They are also interested in hearing how U.S. companies anticipate the potential impact of proposed tariffs, deregulation, and tax policies in 2025 under President-elect Donald Trump’s new administration.
The fourth-quarter 2024 U.S. earnings season kicks off next week, with major banks like JPMorgan Chase and Wells Fargo expected to announce results on Wednesday. Analysts predict that S&P 500 companies will show a 9.6% increase in earnings for the fourth quarter of 2024 compared to the previous year, slightly exceeding the 9.1% growth in the third quarter of the same year.
In 2024, the S&P 500 soared by 23%, largely driven by the success of technology giants like Nvidia and Microsoft in the artificial intelligence sector. Communication services and information technology were the top-performing sectors. Despite a shaky start in 2025, the S&P 500 is currently trading at a high multiple of 21.5 times forward earnings, above the 10-year average of around 18.
Market experts emphasize the importance of companies delivering strong profits to match the market’s valuation levels. While technology and communication services led earnings growth in 2024, financials are expected to top the charts for the fourth quarter. Profit growth is anticipated to broaden in 2025, with healthcare and technology leading the pack, and stronger growth foreseen in industrials, materials, and energy.
Investors are also curious about how company executives will navigate potential policy changes under the new administration, particularly in relation to tariffs and deregulation. The timing and impact of these changes remain uncertain, with possible implications for consumer prices and earnings growth in various sectors.
Overall, the outlook for the earnings season and market performance is optimistic, with hopes for continued growth and a diverse range of sectors contributing to the positive trend.
“Ard, a Univest Wealth Division based in King of Prussia, Pennsylvania,” expressed interest in the potential implications of deregulation on the banking sector. The individual remarked, “I’m also interested in the color we might get from the banks on deregulation.”
Furthermore, there is currently an air of uncertainty surrounding the Federal Reserve’s future interest rate decisions within its current easing cycle. This ambiguity is expected to shift attention towards company statements regarding the strength of the consumer and the resilience of the U.S. economy. Despite initial expectations of a slowdown, the economy has displayed a level of robustness that has surprised many observers.
This information was reported by Caroline Valetkevitch, with editing by Alden Bentley and Anna Driver.
