Trump and Broader Growth in Focus as US Companies Prepare for Q4 Reports

By preparing for the upcoming fourth-quarter reports, investors are closely monitoring the results of US technology companies and large corporations. They are particularly interested in whether these companies will continue to report strong profit growth and if this momentum will extend to other sectors across corporate America.

Another key focus for investors is the potential effects of proposed policy changes, such as tariffs and tax policies, which will be directed by President-elect Donald Trump’s administration starting in 2025. These discussions are expected to be prominent in upcoming earnings calls, where investors hope to gain insight into the impact of these changes on business operations.

The fourth-quarter earnings report season is set to kick off next week, with major US banks like JPMorgan Chase and Wells Fargo scheduled to disclose their earnings on Wednesday.

An analysis from LSEG indicates that overall earnings for companies in the US are anticipated to rise by 9.6% in the fourth quarter of 2024 compared to the same quarter last year, slightly surpassing last year’s third-quarter growth of 9.1%.

Throughout 2024, the S&P 500 index has climbed by 23%, marking its second consecutive year of over 20% growth, driven significantly by gains in major tech firms like Nvidia and Microsoft. Sectors such as communication services, which includes companies like Alphabet, and information technology have shown the most significant gains during the year.

Despite some volatility in early 2025, the S&P 500 is currently valued at a price-to-earnings ratio of 21.5 times its expected future earnings, which is relatively high compared to a decade-long average of about 18, according to LSEG data.

Anthony Saglimbene, the chief market strategist at Ameriprise Financial, emphasizes the importance of earnings reports following a period of significant price increases. He notes that investors have high expectations for leading technology companies and that it is crucial for profits to align with stock valuations. Furthermore, he indicates that growth in earnings could be seen across a wider range of economic sectors with the impending earnings results.

While communication services and technology companies continued to drive earnings growth in 2024, financials are expected to take the lead in the fourth quarter, with expected profit increases of 17.5%.

Looking ahead to 2025, profit growth is projected to be broadening, particularly in the healthcare sector alongside technology, with robust growth anticipated in industrial, materials, and energy sectors as compared to 2024, according to LSEG data.

Stephanie Lang, chief investment officer at Homrich Berg, acknowledges that growth rates are improving and that the broadening earnings landscape is a positive sign for the economy.

Market analysts are also interested in hearing about possible policy changes after Trump takes office on January 20. Proposed policies, such as increased tariffs, could raise consumer prices, while deregulation efforts could enhance profitability in financial and other sectors.

Recent reports suggest Trump may consider declaring a national economic emergency, which could allow for broad universal tariffs on various nations, sparking further market speculation and uncertainty.

Timothy Chubb, the chief investment officer at Girard, notes the significant uncertainty regarding the timing and strategy of tariffs and expresses interest in insights from banks regarding deregulation.

Finally, as the Federal Reserve continues its interest rate cuts, there are growing concerns about the strength of consumer spending and the overall resilience of the US economy, which so far has not shown signs of a significant slowdown.

Trump, growth, earnings