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Weekly Market Commentary

5/14/2024

4 Trends Set to Impact Earnings Season 2024 & Beyond

The financial ecosystem is ever evolving, and the 2024 earnings season is no exception. Consistently, each earnings period generates a flurry of activity amongst investors across the globe as publicly traded companies release their quarterly or annual earnings reports.

For investors, this event indicates stock market performance and dictates subsequent strategic portfolio decisions.

We have observed significant transformations in the earnings season due to many factors. Technological advancements, other dynamics such as global economic conditions, and regulatory changes reshape earnings seasons in ways we haven’t seen before. Here are the trends set to impact earnings season this year and beyond.

Digitization

With the continued adoption of powerful financial technologies, companies now have sophisticated digitized tools and software at their disposal making the process more efficient in monitoring potential losses and forecasting projected returns. These technologies offer real-time insights and date-driven analytics, enabling faster, more accurate reporting and projections.

Cybersecurity is another area of digitization that impacts earnings season. Companies must implement cybersecurity tools to prevent the loss of data and PII (Personal Identifying Information), which can lead to substantial fines, lawsuits, and loss of business.

ESG Factors

Another distinct feature of 2024’s earnings season is the increased scrutiny of Environmental, Social and Corporate Governance (ESG) factors. With growing awareness and concern about sustainable business practices, stakeholders are more alerted than ever about ESG Disclosures. The earnings season is not merely about profit and loss anymore; it also includes whether the firm is aligning its operations with the broader societal objectives. For companies, this means they must look beyond traditional financial metrics and include sustainability targets in their reports, creating a different perspective during the earnings season.

Lingering Pandemic Effects

Moreover, the impact of the COVID-19 pandemic has long-term effects on how companies report their earnings. With industries and economies recovering from the shake-up caused by the pandemic, this ‘new normal’ has been reflected in the 2024 earnings season. In their reports, companies are factoring in business disruptions, shifts in consumer behavior and demand. And supply chain adjustments, among other factors. This shift makes a significant difference in the earnings season by introducing new considerations for businesses and investors.

Geopolitical Dynamics

Geopolitical dynamics also play a crucial role in making the earnings seasons different. The continuous changes in trade policies globally profoundly impact companies’ bottom lines. With countries adopting preservationist measures, trade disputes, and tariffs are causing considerable fluctuations in earnings. Companies must navigate these challenges and forecast their potential impacts while reporting their earnings. Consequently, a higher degree of volatility may occur during earnings season.
 

Let's Team Up

In conclusion, the earnings season in 2024 may differ from its traditional form due to factors such as digitization, sustainability, pandemic impacts, and geopolitical events. These factors provide an evolved perspective for assessing a company’s performance. All these changes encourage investors to consider their insights, shaping the future of investing decision-making. Our office is committed to providing you with the latest insights and tools to help you achieve your investment goals in an ever-changing market environment.


 
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All major US equity indices were positive for the week, with the Dow Jones leading the market, up 2.20%, and the tech-oriented NASDAQ lagging, which rose 1.17%. Mid-caps stocks and small-cap stocks were positive for the week, returning 2.00%, and 1.21%, respectively. Both International and Emerging Markets finished the week with positive returns, rising 1.77%, and 0.98% respectively. International indices, which have seen strength in recent weeks, are still trailing the S&P 500 YTD by 3.74%. Fixed income returns were mostly muted as investors await inflation data this week. The U.S. aggregate benchmark posted a 0.09% return, while the high yield index and global aggregate benchmark declined -0.02%, and -0.10% respectively.


 

Massachusetts Takes Uber and Lyft to Trial Over Status of Gig Workers: Uber Technologies and Lyft are set to face trial on Monday in a U.S. lawsuit by Massachusetts' attorney general alleging the ride-share companies misclassified their drivers as independent contractors rather than more costly employees. The non-jury trial in Boston comes amid broader legal and political battles in the Democratic-led state and elsewhere nationally over the status of drivers for app-based companies whose rise has fueled the U.S. gig worker economy. Massachusetts Attorney General Andrea Joy Campbell is asking a judge to conclude that drivers for Uber and Lyft are employees under state law and therefore entitled to benefits such as a minimum wage, overtime, and earned sick time. Studies have shown that using contractors can cost companies as much as 30% less than using employees. Uber and Lyft argue that they properly classified the drivers, saying they are not transportation companies that employ drivers but technology companies whose apps facilitate connections between drivers and potential riders.


Billionaire Quant Investing Pioneer and Philanthropist James Simons dies at 86: Billionaire investor James Simons, the mathematician and Cold War codebreaker who founded one of the world's most prominent and profitable hedge funds, Renaissance Technologies, has died at 86, his foundation said on Friday. He founded Renaissance in 1978 in East Setauket, New York, 70 miles east of Wall Street. He quickly forged a new way to invest, laying the foundations of quantitative trading that has been embraced by dozens of firms in recent years. Renaissance, whose Medallion Fund delivered average annual returns of more than 60% over three decades, became one of the world's most successful hedge funds under Simons. He is survived by his wife, three children, five grandchildren, and a great-grandchild.


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