Wall Street is bracing for a rough earnings season as macroeconomic issues weigh on profit margins. But even if third-quarter results aren’t so bad, the bigger fear is what Corporate America sees on the horizon.
Expectations for the reporting cycle, which starts with big banks’ results on Friday, are souring, with a stronger dollar, bloated inventory levels and uncertainty over the Federal Reserve’s rate-hiking cycle cited as the main culprits by analysts at Goldman Sachs and Morgan Stanley. Companies have to navigate through a challenging environment where company-specific issues are exacerbated by tight financial conditions.
Of course some companies will manage to clear an earnings bar that over the past three months has been lowered by the most since the pandemic. But what investors want to hear are executives’ views on future growth. And on that, the news will probably be bad.
