Earnings kick off Friday with several banks in the S&P 500 reporting. But consumer discretionary stocks from the benchmark index could capture most of the attention when earnings season swings into full gear.
A total of 118 S&P 500 companies have issued earnings outlooks for the September quarter. That is the highest since FactSet started recording data in 2006, according to its most recent Earnings Insight report, dated Oct. 6.
Here is a quick score card so far:
Forty-two companies have a positive earnings outlook, while 76 have a negative outlook. The percentage of companies issuing negative guidance is equal to the 10-year average.
Meanwhile, 17 companies have reported a positive earnings surprise and 14 have announced a positive revenue surprise.
Consumer Discretionary: Biggest Increase In Estimates
Overall, calendar third-quarter earnings for the S&P 500 are set to decline 0.3%, according to analysts polled by FactSet. That is why picking the right sector is key.
Four out of the total 11 S&P 500 sectors are on watch as analysts revised their earnings estimates upward for the fourth quarter.
Earnings estimates for consumer discretionary stocks increased to 22%, up from 12.5% on June 30. The sector saw the highest increase in analysts' estimates since June 30.
The group includes Tesla, which reports Oct. 18. TSLA shares are approaching a buy point of 278.98.
Energy, Technology, Communications Stocks
Estimates for the energy sector have improved after a strong start. Analysts see an earnings drop of 37.7%, better than earlier views for a 41% drop. But that still constitutes the second-highest increase in earnings predictions.
Further, energy stocks are up the most in price vs. other sectors. Marathon Petroleum, Valero Energy and Phillips 66 have increased average earnings estimates by more than 10%.
In the technology sector, analysts increased their earnings forecasts by 4.2%. Out of 38 companies in the sector, seven have increased views, including Applied Materials and Apple. Technology saw the third-highest increase in appraisals since the start of the quarter.
The communications sector comes in fourth, with a 4.1% hike in predictions since June 30. Meta Platforms and Google parent Alphabet have contributed most to the expected increase.
Analysts lowered their estimates for the materials, industrial and health care sectors since the start of the quarter.
Bank Stocks On Deck
But financial stocks are at the fore of investors' minds in coming days, as several financial institutions report over the next two weeks.
Analysts see stocks in the financial services group showing 12% earnings growth during the quarter; they expect banks to produce 4% earnings growth.
JPMorgan Chase, Wells Fargo, Citigroup, BlackRock and PNC Financial Services are set to report on Friday. But Wall Street expects regional banks to continue to show weakness, with earnings falling 15%.
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