What Macro Challenges? S&P 500 Firms Trounce First Quarter Estimates

Big banks are kicking off earning season in style.

This despite a first quarter 2023 that was anything but sedate, with the collapses of Silicon Valley Bank (SVB) and Signature Bank spurring fears of greater bank runs, and the Federal Reserve continuing to hike interest rates, and countless headcount reductions across the tech sector.

Despite all this, PYMNTS’ CE (ConnectedEconomy) 100 Index saw the banking group in particular jump 5.4%, and Bloomberg reports Bank of America strategists are saying this earnings season is off to its best start in a decade.

Per the report, of the S&P 500 companies that have reported results so far — around 10% of the index — 9 in 10 of them (90%) have “trounced” their earnings per share (EPS) estimates while almost three quarters (73%) have beat on sales.

The impressive results represent the one of the best upside surprises in one of the dreariest seasons going back to at least 2012.

JPMorgan Chase, Citigroup and Wells Fargo all helped lead the charge, and market observers are hoping the strong financial results from the banking industry titans will help further mitigate fears of a banking crisis after the March failures of SVB and Signature Bank.

Adding to the good news, Bank of America has reportedly indicated that its own 2023 first quarter forecasts may in fact be too low, assuming that the events last month were merely temporary and the market landscape continues to show positive signs of easing.

Still, as reported by PYMNTS, according to JPMorgan Chase CEO Jamie Dimon the macroeconomic climate is in the process of moving from “a virtuous cycle to a vicious cycle.”

That warning came from the big bank CEO’s annual letter published two weeks ago (April 4), which was chock full of warnings that the SVB banking crisis would have “repercussions … for years to come.”

Separately, the World Bank issued a dire view that the next 10 years would encompass a lost decade for global growth, stating in a lengthy report that, “nearly all the forces that have powered growth and prosperity since the early 1990s have weakened.”

While first quarter earnings have so far defied the warnings of analysts, executives, and research think tanks, it remains impossible to tell what the future might hold.

The rest of this week may offer an updated view, as 26% of S&P 500 companies, across all sectors except utilities, are due to release their own first quarter earning results.

Per PYMNTS’ own CE 100 Index, the “work” sector was down 1.5%.

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