Facebook
Twitter
Second quarter earnings season is expected to be pretty grim, with earnings down at least 40%.
That’s probably going to rattle the stock market and create more volatility in the second quarter.
That doesn’t mean you can’t still profit. You just need to add another strategy to your trading toolbox.
This strategy wins nearly 80% of the time. And takes just a few minutes a day.
Second quarter earnings season is set to kick off and no one is sure what to expect.
Analyst expectations are all over the place because companies haven’t given much guidance. In fact, dozens of companies have pulled their second quarter earnings guidance because of all the uncertainty created by to COVID-19 pandemic.
FactSet expects the S&P 500’s second quarter earnings to drop by 44.6%. Depending on which analyst you ask, the expected decline falls somewhere between about 20% and nearly 50%.
With banks being among the biggest reporters today, analysts are expecting a sharp decline in profits. They’ve had to bolster loan-loss reserves, setting aside more cash against potential loan defaults, and saw a sharp decline in commercial transactions in the second quarter.
The carnage in the energy sector is also expected to continue as West Texas Intermediate crude is still hovering around $40 a barrel. Low energy prices over the quarter means earnings likely won’t be up to par.
Retailers and industrials are also expected to report a sharp drop in second-quarter earnings.
Many of the analysts predicting a sharp drop in the S&P 500’s earnings are also starting to look for bargains elsewhere.
While cases of COVID-19 are spiking here in the U.S., they’ve been dropping in Europe. That’s lead analysts to guess that there may be a stronger economic recovery in Europe.
BlackRock and other U.S. trading firms have downgraded U.S. stocks to “neutral” in the past few weeks. They’re encouraging investors to begin looking at stocks from France, Germany and other European countries.
That hasn’t led to a mass exit from U.S. stocks – yet.
But uncertainty over second quarter earnings and improving outlook for Europe could create one.
That means U.S. stocks could be in for a wild ride over the next month or so.
That’s especially true if companies don’t give earnings guidance for the rest of the year.
That volatility isn’t necessarily a bad thing. In fact, it could help you turn $5,000 into $2.8 million in just a few short years. Click here to find out how.
Here’s to Profits,
Ben Shepherd