00:00 Speaker A
Well, fresh data from FactSet shows corporate profits are holding steady. The chart here that we’re going to show you shows net profit margins for S&P 500 companies are coming in above their five-year average for the sixth consecutive quarter. And analysts expect the trend to continue into next year. Joining us now, Michael Ryan King, NYSE senior market strategist. Now, there Michael, thank you for being here. There’s a lot of macro headline stuff going on. So I wanted to start with and bring it back to earnings and then maybe we’ll get to the headline stuff.
00:36 Michael Ryan King
Sounds good.
00:37 Speaker A
And that is profit margins are okay, which is perhaps surprising given all the noise.
00:43 Michael Ryan King
Yes, yeah. and and look, I mean, overall, right, the the earnings season thus far has been very solid, right? We’ve seen, you know, the financials kind of came out of the gate, pretty strong numbers, particularly at the money center banks, you know, kind of helped by trading and kind of the investment banking, right? And now we’re starting to see kind of, you know, the the earnings start to broaden out. Last week we started to hear from some of the industrials, you know, kind of and with a lot of those companies, you know, pointing to that solid AI, you know kind of infrastructure demand, you know kind of really driving those numbers, right? The regional banks weren’t quite as strong. We had that brief, you know, very, very brief kind of credit scare, you know, there a couple weeks ago. You know, and then this week we really kind of get into the meat of uh, you know kind of the tech earnings, you know kind of in in, you know kind of the middle of this week. And that’s going to really be kind of probably the the biggest driver of the market this week.
01:42 Speaker A
And do you think it’s going to be a positive driver?
01:44 Michael Ryan King
Right. So, I mean, that’s and that’s and that’s really like the question I think about all of these catalysts that we have this week, that we have high expectations, right? We’ve now reshited the expectations for kind of China, right? We have high expectations for the Federal Reserve to cut rates. There is also very high expectations for those tech earnings, right? And so, what we’ve seen is a lot of, you know, kind of deal announcements and and it’s hard to keep kind of feeding that that kind of that the AI hype, right? And we’re going to see solid numbers. Uh it’s just a question of kind of how markets respond to that on the back end. I can’t imagine that we’re going to hear anybody really suggest that we’re slowing down in some of that CapEx spending this quarter, right? It’s just you know, we’re just hearing everybody kind of ramp that up, right? So, I don’t think we’re going to hear that sort of inflection point from here. Now, what we’ve seen kind of within the market, right, is we’ve seen, you know, very interesting reactions. So if you look back last week to GE Vernova or Vertive, right? They had very, very solid earnings. Stocks gapped up, kind of sold off pretty sharply during the session, but if you look over a two or three-day window, they kind of ended up right back where they were, right? So there was a lot of volatility. I do think, you know, options positioning is driving a lot of that, you know, kind of at a single stock level and, you know, kind of at the index level, right? And and you know, but we’ll have to see kind of how markets, you know, take this week’s news.
