What to expect during the Q3 Earning Season in 2024 

Q3 2024 earnings season is in full swing, and while the broader market remains bullish, sector-specific trends are starting to take shape. The steady stream of corporate reports and outlooks provides CFD traders with valuable information to refine their strategies and adjust their positions.

Earnings announcements often spark increased market volatility, presenting potential trading opportunities.

Large financial institutions usually kick off the reporting season, followed closely by major tech companies and industry leaders like IBM (IBM), Coca-Cola (KO), and Mastercard (MA).

These “Bellwether” blue-chip earnings reports can serve as powerful indicators of economic health and broader market trends.

What to expect from Q3 earnings

The S&P 500 is set for another quarter of growth, with projected earnings and revenue increases of 4.6% and 4.8%, respectively for Q3 2024. This marks the fifth consecutive quarter of growth for the index.

Despite the overall market optimism, sector performance is diverging. Information Technology and Healthcare are primed for strong growth, while the Energy sector is facing significant challenges. Although oil prices declined during Q3, recent geopolitical events in the Middle East have led to a rebound.

Q3 earnings estimates have been revised downward by 3.2% from initial projections, marking a more significant decline compared to previous quarters. Several companies have issued negative EPS guidance, reflecting sector-specific challenges and underlying market uncertainty. Despite this, analysts remain optimistic, projecting double-digit earnings growth for both 2024 and 2025.

Spotlight on banking

Major banks are currently facing significant pressure on net interest income due to the Federal Reserve's easing monetary policy, which has compressed net interest margins. Concerns about credit quality are also on the rise, driven by cumulative inflation and a weakening labour market.

However, the easing monetary policy may present long-term opportunities for banks to navigate these pressures more effectively.

Tech Giants Lead the Way

The tech sector is expected to deliver strong Q3 results, primarily driven by the Magnificent 7. These leading tech companies, representing over 20% of S&P 500 earnings, significantly impact the overall market. NVIDIA, a key driver of the broader tech sector's performance (which itself contributes nearly 40% of S&P 500 earnings), is expected to play a pivotal role in this positive outlook.

What to watch for in Q4

Analysts forecast an acceleration in Q4 earnings growth, setting the stage for a stronger overall market. Sectors like Energy and Banking will be key to watch as economic conditions evolve.

The outcome of the 2024 US elections could have a significantly impact on energy stocks, as the two parties have distinct energy policies. In 2020, Joe Biden's climate change focus boosted renewable energy stocks, while several fossil fuel stocks declined. Conversely, Donald Trump's pro-fossil fuel stance in 2016 led to a surge in energy stock prices.

As earnings season progresses, it's important for market participants to monitor geopolitical events in the Middle East, as these can influence oil prices. Monitoring sector-specific performance trends could provide opportunities to adjust CFD strategies accordingly.

Earnings Calendar for October 2024 

Source: Bloomberg Terminal

7 stocks to watch in October

1. JP Morgan Chase (11 October)

JPMorgan Chase, the first major bank to report Q3 earnings, is expected to see a modest revenue increase of 3.4% to $41.25 billion but a decline in earnings of 6.7% to $4.03 per share. While subdued loan demand, despite the Fed's rate cuts, presents challenges, JPMorgan's performance remains strong compared to its peers.

Other major banks, such as Bank of America and Wells Fargo, are also expected to report lower Q3 earnings. However, the banking sector is expected to benefit from a declining interest rate environment, with improved loan demand, favourable deposit trends, and increased investment banking activities.

2. Johnson & Johnson (15 October)

Johnson & Johnson, a leading healthcare company with a market cap of $386 billion, is anticipated to report a profit decline of 18.1% to $2.18 per share in Q3. Despite this, the company has consistently exceeded Wall Street's earnings estimates in recent quarters. Analysts project marginal EPS growth to $10.01 for fiscal 2024 and of nearly 6% to $10.61 in fiscal 2025. JNJ's raised 2024 sales guidance to $89.6 billion reflects confidence in its financial outlook, even amidst ongoing talc powder-related litigation.

3. Netflix (17 October)

Netflix is expected to report Q3 earnings of $5.12, a significant 37% increase year-over-year. Revenue is projected to reach $9.85 billion, a 14.5% increase compared to the same period last year. The company's focus on boosting margins has resulted in a guided operating margin of 28.1%, up from 22% in the previous year. This expansion is driven by revenue growth outpacing operating costs due to economies of scale and potentially lower content spending growth. Netflix's price increases are also contributing to profitability. Despite being the industry leader in terms of churn, Netflix experienced a surge in cancellations in the US after co-founder Reed Hastings endorsed Kamala Harris for president and donated $7 million to her campaign.

4. Tesla (18 October)

Tesla, which recently posted its third-quarter vehicle production and deliveries report, is set to report Q3 earnings of $0.604, a 16.2% increase from the previous quarter. The company is expected to report robust revenue growth, driven by strong demand for its electric vehicles, particularly the Model Y and Model 3.

Tesla's expanded manufacturing capacity and increased output have led to a significant increase in vehicle production and deliveries compared to the previous year. In Q3 2024, Tesla produced 469,796 vehicles and delivered 462,890. While Tesla's revenue is set to surge, concerns about margin pressure due to increased competition, rising raw material costs, and pricing adjustments may be on investors' minds.

5. Coca-Cola Co. 24/10

Coca-Cola, the global beverage giant with a market capitalisation of approximately $309.6 billion, is anticipated to report Q3 earnings per share (EPS) of $0.75, a slight increase from the previous year's $0.7412. Analysts project full-year EPS to reach $2.85, marking a 6% increase from fiscal 2023. The company's stock has outperformed the S&P 500 this year, gaining 21.7% compared to the index's 19.7%. Coca-Cola's earnings are expected to continue growing, reaching $3.03 per share in 2025, a 6.32% increase. This consistent earnings and dividend growth makes Coca-Cola an attractive option for long-term investors seeking stability in their portfolios.

6. Microsoft

Microsoft, which is presently competing with NVIDIA for the title of the world's second-largest corporation by market capitalisation behind Apple, is likely to publish Q3 earnings of $3.11 per share, a 4% increase from $2.99 last year. The company's strategic focus on improving its product lineup with sophisticated AI capabilities, as seen by the recent introduction of "Strawberry," has contributed to its stock performance. Microsoft's Azure platform continues to be a key growth driver, but at a slower pace. The incorporation of AI into Azure is expected to boost renewed demand and accelerate the company's growth.

7. Amazon (25 October)

Amazon is anticipated to report Q3 earnings of $1.14, a 21.3% increase from the previous year's $0.94. While bullish investors believe Prime Video's large ad-supported user base, growing content, innovative ad formats, and rich data and measurement capabilities position it for strong advertiser results, bears express concerns about rising inflation and a potential US technical recession impacting cloud infrastructure spending and AWS revenue growth. Historical reactions to earnings reports suggest that Amazon's stock can experience volatility post-announcement; for example, shares fell by nearly 8.8% after the last report.

How to trade the earnings season with Axi

Axi offers access to CFDs on 495+ popular global shares, including JPMorgan (JPM), Goldman Sachs (GS), Tesla (TSLA), Alphabet (GOOGL), Apple (AAPL), Amazon (AMZN), Meta Platforms (MVRS), Microsoft (MSFT), EXXON (XOM), and Walt Disney (DIS).

To stay informed about company earnings dates and trade the earnings season with Axi: 

1. Track Earnings: Use Axi's Earnings Calendar to stay ahead of the curve. 
2. Monitor & Analyse: Employ Axi's charting tools to monitor stock prices before, during, and after earnings, and analyse market expectations. 
3. Go Long or Short: Speculate on market movements with CFDs, leveraging Axi's reduced fees and tight spreads. 

Ready to trade your edge?

Join thousands of traders and trade CFDs on forex, shares, indices, commodities, and cryptocurrencies!

This information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. It has been prepared without taking your objectives, financial situation, or needs into account. Any references to past performance and forecasts are not reliable indicators of future results. Axi makes no representation and assumes no liability regarding the accuracy and completeness of the content in this publication. Readers should seek their own advice.  Data is sourced from third party providers.