The Consumer Discretionary sector continues to face challenges, with macro commentary remaining conservative across the board. However, a sense of cautious optimism is building among executives who anticipate improvement over the course of the year — a theme we are hearing across sectors.
Post-election clarity has bolstered customer sentiment across several end markets, with demand and order trends taking center stage during earnings calls. However, evolving policy directives continue to command attention, shaping both investor discussions and, no doubt, your schedules over the past week!
Overall U.S. Big Bank commentary reflects optimism toward the year ahead and the potential to build on solid momentum seen post-election, though enthusiasm remains somewhat tempered by ongoing geopolitical risks and unknowns around how policy will unfold under a Trump 2.0 administration. As observed in our Q4’24 Inside The Buy-Side® Earnings Primer®, the heightened election uncertainty that prevailed in the Fall has been replaced by policy uncertainty.
As we wrap up our coverage of Q3’24 earnings season, it’s clear that macro uncertainty remains top of mind with commentary heavily influenced by the U.S. election, questions around the path of Fed rate cuts, and heightened geopolitical turmoil.
While the equity markets got a shot in the arm this week from the U.S. election, results from the Materials sector this earnings season are yet another reminder that the market is not the economy.
Earnings season continues to march on, demonstrating that it’s tough out there from a top-line perspective. Something to be aware of, more companies continue to highlight cost-cutting initiatives, raising the level, while layoff announcements and restructurings underpinned by headcount reductions are on the rise.
While there is hope for a greater sense of clarity once past the U.S. election (less than two weeks away!), shifting policy implications remain a wild card, and geopolitical tensions have shown no signs of abating. In addition, the impact of Fed rate cuts will take time to be felt, while recent hurricanes in the Southeast and evolving labor actions are adding to near-term headwinds in some sectors.
Overall U.S. Bank commentary is more upbeat than expected on a resilient economy, but executives remain guarded in their comments around the road ahead given ongoing risks with heightened geopolitical turmoil and an uncertain U.S. political landscape as we march toward the November U.S. presidential election.
Investor sentiment captured in our Inside The Buy-Side® Earnings Primer® Q3’24 survey reveals heightened concerns around demand and growth with a focus on margins. Off-cycle earnings reports are corroborating what we’re hearing more broadly – continued retrenchment across many markets amid a subdued customer and strapped consumer, while AI / digital and infrastructure stimulus continue to serve as bright spots.
As we wrap up our coverage of Q2’24 earnings season, it’s clear that commentary remains heavily influenced by macro factors like the election, the Fed’s actions, geopolitical risks, and shifting consumer behavior.
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