Earnings season looms as the next market catalyst

Investors to look to revenue growth and the impact of tariffs, tax cuts.

  • By Akane Otani and Tristan Wyatt,
  • The Wall Street Journal
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The third-quarter earnings season kicks off in earnest Friday, with JPMorgan Chase & Co. (JPM), Wells Fargo & Co. (WFC), Citigroup Inc. (C), and PNC Financial Services Group Inc. (PNC) scheduled to post results. Investors hope another quarter of double-digit growth will help stabilize stocks recently buffeted by trade and interest-rate worries.

Technology and financial companies have accounted for the biggest share of the S&P 500's (.SPX) overall earnings growth in recent years. But when it comes to revenue growth, health care and consumer staples have been the biggest contributors.

As was the case in the second quarter, tax cuts are expected to account for a hefty chunk of earnings growth. But analysts are reassured that revenue is also expected to be a major driver of earnings.

One thing analysts say they will be watching for: how often companies mention tariffs hurting their profits. More than a third of the S&P 500's revenue comes from outside the U.S.

That also leaves many of the firms in the S&P 500 vulnerable to currency swings. A stronger dollar makes multinationals' goods more expensive to buyers outside the U.S., potentially crimping profits.

Investors say another quarter of solid results should help propel U.S. stocks, which have jumped past their international peers.

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