5 Stocks Likely To Win Big On Earnings This Week
Zacks Investment Research | Aug 27, 2019 07:39AM ET
Wall Street is reeling under severe volatility since the beginning of August due to uncertainty related to trade-related conflict, which resulted in the inversion of the main treasury yield curve and global economic slowdown. The ongoing trade tussle between the United States and China aggravated on Aug 23.
Meanwhile, even amid a cut-throat tariff war with China, second-quarter 2019 earnings results have so far come in better than expected. In line with better-than-expected earnings reports, five companies are set to beat earnings estimates this week.
U.S.-China Trade Conflict Worsens
On Aug 23, China announced that it will impose 5% to 10% tariff on another $75 billion of U.S. goods in two tranches, on Sep 1 and Dec 15. Additionally, a 25% tariff on U.S. auto products and auto parts will be imposed effective Dec 15.
In retaliation, President Donald Trump decided to raise tariff to 30% from the existing 25% on $250 billion Chinese goods. Moreover, he also raised the tariff to be levied on an additional $300 billion of Chinese exports effective Sep 1 from 10% to 15%. Consequently, tariff on $550 billion Chinese goods will cover total U.S. imports from China per annum.
Furthermore, Trump tweeted by issuing an order to U.S. companies to look for an alternative to China for their operations including returning home. President Trump also hinted that prolonging the U.S.-China trade conflict can lead to the imposition of national emergency, though not immediately.
On Aug 26, President Trump said in the G-7 meeting at France that the two sides will sit for talks once again after the Chinese authority made a call to White House correspondents. However, the communist regime played down the significance of these talks.
Better than-Expected Second-Quarter 2019 Earnings So Far
As of Aug 22, 477 S&P 500 members have reported second-quarter earnings results. Total earnings for these 477 index members are up 0.5% from the same period last year on 4.7% higher revenues. Notably, 75.9% companies surpassed EPS estimates while 57.4% beat revenue estimates.
At present, total second-quarter earnings for the S&P 500 Index are expected to be up 0.3% from the prior-year period on 4.6% higher revenues. This is a massive improvement from an earnings decline of 3.4% on 3.9% higher revenues, expected in the beginning of the second-quarter earnings session.
Notably, Wall Street had witnessed negative earnings (0.2% earnings decline on 4.2% higher revenues) in the first quarter for the first time since the second quarter of 2016. (Read More: Zacks Investment Research
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