Banks and utilities will post strong profit performance when the earnings season kicks off on Friday. Fred Katayama reports.
Get set for robust earnings growth when big companies report their fourth quarter results starting Friday. The corporate report cards could further reinforce their emergence from the earnings recession that began in late 2015. Thomson Reuters sees profit for S&P 500 companies rising 5.7 percent. Phoenix Financial Services chief market analyst Wayne Kaufman: SOUNDBITE: WAYNE KAUFMAN, CHIEF MARKET ANALYST, PHOENIX FINANCIAL SERVICES, (ENGLISH) SAYING: "I just think we're starting to see a better economy and better growth. And I think that's really the key thing." The standouts: banks and utilities. Thomson Reuters estimates financial institutions will see profits rise nearly 14 percent, led by strong performances in investment banking and brokerage activity. Utilities' earnings expected to soar nearly 10 percent. The unusually warm winter had slammed utilities' growth in 2015, making for an easy comparison. The big laggard could be industrials. Airlines will be the major drag there. Delta reporting Thursday a 37 percent drop in profit. Stocks now sport high valuations after rallying strongly following the election victory of Donald Trump. RBC Capital Market's chief equity strategist Jonathan Golub said, "Following two calendar years of near-zero growth, more robust earnings per share prospects for 2017 and 2018 should support higher stock prices." The key thing for investors to focus on, say Golub and Kaufman: the outlooks companies will issue for the start of the Trump era.