When fourth-quarter earnings results hit this week, the bar for companies will be low.
The bar for companies’ fourth-quarter earnings continues to get lower as Wall Street’s hopes for a holiday-season jolt fade and layoffs pile up in tandem with ongoing agita over a possible recession.
“Expectations are low. Sentiment is weak,” said Sheraz Mian, director of research at Zacks Investment Research. “Anything that comes in even marginally better than that will be perceived favorably by the stock market. This, in essence, will be a replay of what we saw in the preceding reporting cycle.”
Macy’s Inc. M stock on Friday tumbled after a more tepid holiday-period sales forecast, and its CEO said “the consumer will continue to be pressured in 2023.” Bed Bath & Beyond Inc. BBBY is reportedly preparing to file for bankruptcy after its own holiday sales fell short. Amazon, which fields a massive amount of holiday demand every year, is among the latest large companies to announce thousands of layoffs as the tech industry comes off a pandemic-era boom.
The results will arrive as the Federal Reserve, in an effort to preserve longer-term economic stability, tries to raise businesses’ borrowing costs in an effort to reverse the growth that has pushed hiring, wages and, in turn, prices, higher. Companies have passed their own costs along to consumers. However, some executives have said demand is still strong enough for them to keep prices higher.
Ailing home-goods retailer and meme stock Bed Bath & Beyond reports quarterly results on Tuesday. Grocery chain Albertsons Cos. Inc. ACI also reports Tuesday, as its deal to combine with Kroger Co. KR draws more scrutiny amid concerns about higher food prices, competition and grocery-store accessibility. Homebuilder KB Home KBH releases results on Wednesday amid expectations for a continued housing-market slump this year.Friday will be all about the big banks, air travel and health care.
She also said that a strong first quarter could come from easier comparisons, given that the omicron variant of COVID-19 put a damper on business in early 2022.
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