Latest / Markets with Megan: A Quick Financial Markets Update / Surprise Earnings! What’s next? | S2 E071 | 09-02-25

Transcript

Surprise Earnings! What’s next? | S2 E071 | 09-02-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: We pretty much have the second quarter earning season behind us.
• 0:03
  Megan Horneman: It's Tuesday, september the 2nd, and this is Markets with Megan.
• 0:06
  Megan Horneman: If you like this podcast, please subscribe.
• 0:09
  Megan Horneman: Hit that alarm bell.
• 0:10
  Megan Horneman: You can share with friends, family or colleagues.
• 0:12
  Megan Horneman: But we're here today to just kind of give you a roundup of what we saw after the 2Q earnings season, and it is very much delayed.
• 0:19
  Megan Horneman: It is September now and second quarter was over at the end of June.
• 0:23
  Megan Horneman: But throughout the summer we got earnings from all of the different sectors and, as we look at earnings season, about 80% of the companies beat the estimates coming into earnings season and that's very good.
• 0:34
  Megan Horneman: The earnings growth on a year-over-year basis actually came in slightly above 10%.
• 0:41
  Megan Horneman: It was around 12% and that's above the 10-year average, which is slightly lower than that 10%.
• 0:43
  Megan Horneman: It was around 12% and that's above the 10-year average, which is slightly lower than that 10%.
• 0:47
  Megan Horneman: It's also higher than what the estimate was coming into the earnings season, which was also a little bit less than 10%.
• 0:54
  Megan Horneman: And now, when we look at the details in this earnings season, a couple things to point out.
• 0:58
  Megan Horneman: We did notice that recession chatter did quiet down quite a bit In past earnings season.
• 1:03
  Megan Horneman: This has been something companies have really noted.
• 1:06
  Megan Horneman: But we saw that the number of companies that cited recession during their earnings calls actually fell almost 90% compared to the first quarter.
• 1:16
  Megan Horneman: So companies aren't as concerned about an imminent recession.
• 1:20
  Megan Horneman: We saw retailers, which was surprising.
• 1:22
  Megan Horneman: Retailers actually do much better than anticipated and we highlighted first of all just Amazon and Walmart.
• 1:29
  Megan Horneman: Now there were a lot of sales incentives throughout the quarter which might have helped.
• 1:34
  Megan Horneman: But also we saw some comments from tariffs.
• 1:39
  Megan Horneman: Walmart says they basically are going to keep prices low and they're able to absorb the majority of those tariffs.
• 1:45
  Megan Horneman: Now they did comment towards the end of the quarter that there were some pullback in consumer spending, specifically in that middle and low income shoppers just really shifting their spending habits.
• 1:56
  Megan Horneman: So earnings better than expected there, but still kind of giving that warning flag for the future.
• 2:03
  Megan Horneman: As we've seen in the past few quarters, technology has driven this earnings growth.
• 2:07
  Megan Horneman: When we look at the infotech sector, it was the second largest contributor.
• 2:11
  Megan Horneman: We saw earnings up over 20% on a year-over-year basis.
• 2:16
  Megan Horneman: Semiconductors really led.
• 2:17
  Megan Horneman: That we did talk about, you know, nvidia had relatively good earnings.
• 2:22
  Megan Horneman: That was always the focus in earnings season.
• 2:31
  Megan Horneman: Now, as we move forward into the third and fourth quarter of this year.
• 2:32
  Megan Horneman: We think that obviously the recession banter, the recession talk is kind of fading, but we are still getting a lot of the concern around tariffs, especially with some of the headlines we've gotten here at the end of last week.
• 2:42
  Megan Horneman: So we're waiting for companies to give us some more indication of what maybe we may look forward to in the third and fourth quarter.
• 2:48
  Megan Horneman: What concerns us about the third quarter is that we've started to see earnings revised higher for this quarter, for third quarter, and that's not something you typically see.
• 2:57
  Megan Horneman: Typically, earnings are revised lower so that you can beat that bar, but we have seen earnings revised higher for the third quarter, so there's room there that we may get some disappointment.
• 3:05
  Megan Horneman: That's all we have for earnings the earnings recap.
• 3:09
  Megan Horneman: If you like this podcast, you can always look at our history of them with marketswithmeganfm.
• 3:13
  Megan Horneman: Thank you,