Earnings-season forecasts are dim for America’s biggest companies as profits get pressured

’Tis the season… but it may not be so jolly. Earnings season is upon us, and expectations aren’t high for the first-quarter stocking. Quarterly profits from S&P 500 companies are expected to have dropped 6.8% from last year — that would be the sharpest earnings decline since lockdown-era 2020 and the second straight quarter of falling profit. Meanwhile, analysts expect that sales inched up a measly 1.8%. But the kickoff to earnings season pleasantly surprised:

• Bank buster: On Friday JPMorgan Chase and Citi reported stronger-than-expected #s, with JPM posting record revenue and a 50% profit surge on higher interest rates.
• Stocking stuffer: Despite less-than-stellar earnings expectations, the S&P 500 is up 8% for the year, while the techy Nasdaq has gained 17%.

Growth at all costs < profit at less cost… Soaring interest rates and sticky inflation have eaten into profits and cooled demand. Cue: companies are shifting away from growth-driven investments to focus on cost-cutting profit boosters. It’s “the year of efficiency,” Meta CEO Zuck says. Corporate titans are tightening their belts to prep for a downturn. Last week the Fed said it expected that the banking-crisis fallout would tip the US into a recession this year.

• Cold-brew cuts: In addition to sweeping layoffs, companies like Meta, Goldman Sachs, and Salesforce have cut cushy employee perks like barista-brewed coffee. Google is swapping pricey MacBooks for Chromebooks.
• Robo-savings: Companies like Disney and Microsoft are backtracking on big bets like the metaverse. Instead, corporations are investing in things that could reduce costs long term (think: Walmart and Amazon leaning into warehouse automation).