Preview: Trump, broader growth in focus as US companies prepare Q4 reports

Univest Financial

10/01/2025 15:37

(Repeats story published originally on Jan 9, no changes)

        * 
      Investors watch tech and other sectors for profit growth
    

        * 
      Trump's policies may impact 2025 corporate outlook
    

        * 
      Healthcare, technology and industrials expected to lead
2025
growth
    

  
    By Caroline Valetkevitch
       NEW YORK, Jan 9 (Reuters) - Investors are watching to
see if technology companies and related heavyweights will add to
recent strong profit gains and whether growth is broadening to
other sectors as corporate America prepares to report on the
final quarter of another standout year for Wall Street.
    They also want to hear what U.S. companies may say about the
potential impact in 2025 from proposed tariffs, deregulation and
tax policies under President-elect Donald Trump's new
administration. 
    The fourth-quarter 2024 U.S. earnings season gets rolling
next week, with some of the largest U.S. banks, including
JPMorgan Chase  JPM.N  and Wells Fargo  WF.N , expected to
report results on Wednesday.
    Analysts expect S&P 500 companies overall to have increased
earnings by 9.6% in the fourth quarter of 2024 compared with the
year-ago period, which would be slightly better than the 9.1%
earnings growth of last year's third quarter, according to data
compiled by LSEG.
    The S&P 500  .SPX  rose 23% in 2024, its second-straight
year of gains exceeding 20%, fueled in part by sharp gains in
Nvidia  NVDA.O , Microsoft  MSFT.O  and other U.S. megacap
companies leading the race for artificial intelligence
technology. Communication services  .SPLRCL , which includes
companies such as Alphabet  GOOGL.O , and information technology
 .SPLRCT  had the biggest sector gains in 2024.
    Even after a wobbly start to 2025, the S&P 500 is trading at
a multiple of 21.5 times forward earnings, expensive compared to
a 10-year average price-to-earnings ratio of about 18, based on
LSEG data.
    "We've had a lot of multiple expansion over the last couple
of years. We need to see profits kind of follow through, so it
will be important what these companies say about their
fundamental conditions," said Anthony Saglimbene, chief market
strategist at Ameriprise Financial in Troy, Michigan.
    Expectations are high for big technology-related names, so
they need to deliver upbeat results, he said, but "more sectors
of the economy are expected to see profit growth start to
accelerate, and that could start" with upcoming fourth-quarter
results.
    Communication services and technology companies dominated
earnings gains in 2024, and they are estimated to have had among
the biggest growth in the fourth quarter as well, LSEG data
shows. But financials  .SPSY  are seen on top for fourth-quarter
2024 growth as well, with estimated quarterly profit gains of
17.5%.
    And profit growth is expected to broaden in 2025, with
healthcare  .SPXHC  leading the way along with technology, and
much stronger performance seen in industrials  .SPLRCI ,
materials  .SPRLRCM  and energy  .SPNY  compared with 2024,
based on the LSEG data.
     
       
    "Growth rates are picking up from 2024 to 2025," said
Stephanie Lang, chief investment officer at Homrich Berg in
Atlanta, and "what we view as a positive is the broadening out
of earnings."
    Market watchers are also keen to hear from company
executives about potential policy changes after Trump takes
office on Jan. 20.
    Some of Trump's plans, especially those for higher tariffs,
could drive up consumer prices, while potentially less
regulation under the new administration could fuel earnings
growth in financials and other sectors.
CNN reported on Wednesday that Trump is considering declaring a
national economic emergency to provide legal justification for a
large swath of universal tariffs on both allies and adversaries.
    "There's obviously a lot of uncertainty right now, and the
timing of tariffs and the cadence in which they're rolled out
matters a lot," said Timothy Chubb, chief investment officer at
Girard, a Univest Wealth Division based in King of Prussia,
Pennsylvania. 
    "I'm also interested in the color we might get from the
banks on deregulation," he said.
    Also, uncertainty over how many more times the Federal
Reserve may cut interest rates in its current easing cycle is
likely to put focus on company comments about the resilience of
the consumer and the U.S. economy, which has so far defied
expectations for a slowdown. 

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Estimated S&P 500 earnings growth    https://tmsnrt.rs/40s9ARU
S&P 500 profit growth in 2024 vs 2025 estimates    https://reut.rs/408zUiA
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Caroline Valetkevitch; Editing by Alden Bentley
and Anna Driver)
 ((mailto:caroline.valetkevitch@thomsonreuters.com))