Earnings szn kicks off as investors strap in for what could be a bumpy quarter

’Tis the season to be profitable… The third-quarter earnings season started Friday with JPMorgan Chase unloading a solid earnings beat. But zooming out, analysts expect slower earnings growth generally after a blockbuster Q2 reporting season, when earnings per share popped 12%. Now, Wall Street estimates that S&P 500 cos will see earnings growth of roughly 4% (though historically most companies have beaten forecasts).

• Market check-in: This month, the S&P 500 posted its fourth straight quarter of gains (its longest win streak since 2021) and is up 23% for the year.

• Keepin’ score on Q4: Stocks cruised to records last week, but October’s been rocky as traders weigh many moving pieces. 

Not just earnings… Investors have a lot to chew on this quarter. Among the biggest: 

• Rate cuts: Lower interest rates tend to be good for stocks, and in September the Fed came in hot with a jumbo cut. But after a strong jobs report — and Fed Chair Powell’s comments that the bank’s in no rush to cut quickly — traders on Friday were betting on a 10% chance of no trim at all next month.

• The economy: A soft landing’s looking more likely. Inflation kept cooling last month, and the US added about 100K more jobs than expected, while unemployment fell. Investors appear less worried about the economy, but that seems to be making them anxious that the Fed won’t cut rates fast enough.

• US elections: Presidential elections tend to introduce a lot of uncertainty and volatility in markets in the months leading up to the big day. The candidates have different policies on things like corporate taxes, energy, and tariffs, which can influence market moves. 

• Middle East turmoil: Escalating conflict between Israel, Iran, and Iran-backed Hezbollah has led to spiking oil prices. Iran controls the Strait of Hormuz, through which 20% of the world’s oil passes, and the worst-case scenario for oil markets is a blockage.