Third-quarter earnings are about to kick into high gear — and amid the 'will-we-or-won't-we' recession question, all eyes will be on corporate America for signals about the economy's health.
" recession question, we’ll be looking for signals from corporate America about the economy's health.The Fed’s trying to engineer a soft landing, and the pending Q3 results will paint a picture of how companies are handling that so far.
“Right now, the macro is a really big driver,” says Tim Murray, capital market strategist in T. Rowe Price’s multi-asset division.With recession fears on full boil, companies with big earnings misses may take the opportunity to blame the macro environment .How to tell the difference? See how they line up against peers in their industry, says Raheel Siddiqui, senior research analyst at Neuberger Berman.That's down from the 9.
For any individual company, hiring pullbacks could be a sign of problems — "but if we're seeing that broadly, it's a good outcome for the economy," he adds.was growing by roughly 20% year over year, according to BofA Research calculations. That's likely to decline, in no small part thanks to the higher rates engineered by the Fed, Siddiqui says. The question is by how much?
If growth goes to low single digits or worse, it's a sign that recession may be close at hand, he adds. "Capex is one of the last things to slow ... it's the dust after the car has left."For individual companies and their stock performance, all eyes are on margins and guidance.Meanwhile, expect companies with negative guidance to be punished in the markets. Those with positive guidance will need a compelling story to back it up, Murray says.
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