tl;dr
Wall Street enters earnings week under pressure amid rising costs, trade disputes, and political tensions. Major U.S. banks will report earnings as analysts predict a slowdown in S&P 500 earnings growth to 4%, down from 12% earlier, due to tariff-related cost increases and stagnant sales. European b...
Wall Street is entering earnings week amid rising pressure and growing instability after months of record highs in both the U.S. and Europe. Major American banks—including JPMorgan, Goldman Sachs, Bank of America, Citi, and Morgan Stanley—are set to report results within two days, at a time when trade disputes, new tariffs, and political tensions at the G20 summit cloud the economic outlook. Investors are closely monitoring how President Trump’s trade policies are impacting corporate profits, with analysts from Goldman Sachs pointing out that while costs from tariffs are rising, companies have only slightly increased prices, squeezing margins.
Goldman Sachs predicts that earnings-per-share growth for the S&P 500 will slow dramatically to just 4% this quarter, down from 12% in the first quarter. Rising costs and stagnant sales are creating a challenging environment for U.S. companies. In contrast, European banks have surprised many with strong performance, posting the best first-half results since 1997 thanks to booming investment banking profits and active merger and acquisition deals. U.S. banks may look to emulate this success, but uncertainty remains, particularly around trading revenues and deal pipelines.
The upcoming earnings reports will be a crucial barometer for the U.S. economy’s direction, as investors seek not just solid numbers but reassurances that companies can navigate looming challenges such as inflation, additional tariffs, slowing global demand, and potential consumer pullbacks. CEOs will face intense scrutiny during earnings calls, with their responses potentially triggering swift market movements.
Meanwhile, global politics are injecting additional complexity into the markets. As G20 finance ministers and central bank leaders meet in Durban, South Africa, the U.S. is notably absent, with Treasury Secretary Scott Bessent attending a meeting in Japan instead. This absence comes amid tense relations following a diplomatic debacle involving South African President Cyril Ramaphosa and Trump, as well as the imposition of a new 30% U.S. tariff on South African goods. Market participants remain wary of escalating tensions as they look ahead to the November G20 summit, with Trump’s attendance still uncertain.
The U.S. economic calendar is equally busy, with a series of critical data releases scheduled, including fresh tariff impacts on Monday, June inflation figures on Tuesday, Producer Price Index data on Wednesday, retail sales on Thursday, and consumer sentiment on Friday. The schedule is topped off with twelve Federal Reserve speakers throughout the week, all scrutinized for hints of monetary policy shifts.
In sum, this week promises to be pivotal for investors seeking clarity amid a maze of economic pressures and geopolitical turbulence. The earnings results and data releases will provide key insights into how businesses and markets are bracing for the turbulent months ahead.