Most S&P 500 sectors to grow EPS; banks' capital offerings rise; US growth cools

In this edition of?Insight Weekly, we put the spotlight on US corporate earnings. According to the latest S&P Global Market Intelligence data, most of the S&P 500 sectors are forecast to report higher EPS year over year in their first-quarter financial results. Energy companies are expected to be the top performers, with their first-quarter EPS projected to rise 27.3% from the same quarter a year ago. The industrials, utilities and communication services sectors are anticipated to see the largest declines in sectorwide EPS performance. Analysts in the US utilities sector expect power demand from artificial intelligence and datacenters to be a key theme on first-quarter earnings calls. In the gas utilities industry, investors will pay close attention to rate case progress, weather impacts and company-specific earnings catalysts.

US banks' first-quarter capital issuances reached an almost three-year high, thanks to increased senior debt and preferred equity offerings. Capital offerings totaled $31.64 billion, representing an increase of 41.5% quarter over quarter and 467.8% year over year, according to Market Intelligence data. The total value of the offerings was the highest since $38.45 billion in the second quarter of 2021.

The US economic upturn lost momentum at the start of the second quarter. The headline S&P Global Flash US PMI Composite Output Index dropped to 50.9 in April from 52.1 in March. The latest data indicated the slowest growth since December 2023. Business activity growth eased to three- and five-month lows in the manufacturing and services sectors, respectively.

US Corporate Earnings in Focus

Most S&P 500 sectors forecast to grow Q1 EPS

Analysts predict gains for most of the index's mega-cap companies.

—Read more on S&P Global Market Intelligence.

AI-driven power demand to drive discussions on US utilities' Q1 earnings calls

"There's no doubt that datacenters, and their robust demand for 24/7 power, are providing a big spark of excitement among utility investors," Scotia Capital (USA) analyst Andrew Weisel wrote in an April 22 report.

—Read more on S&P Global Market Intelligence.

Tough setup for gas utilities puts investors on the hunt for earnings catalysts

With hopes for interest rate cuts and cold winter weather dashed, analysts said rate case progress, weather impacts and company-specific catalysts will take on greater importance in gas utility first-quarter earnings reports.

—Read more on S&P Global Market Intelligence.

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Deep Dives

In-depth features looking at the impact of major news developments in key industries.

Financials

High expectations hurt big bank stocks despite Q1 2024 beats

A failure to deliver more upbeat guidance on net interest incomes disappointed investors after a strong run for the group, analysts said.

—Read more on S&P Global Market Intelligence.

US banks' capital offerings hit highest level since Q2 2021??????????

US banks raised a total of $31.64 billion in the first quarter, the highest since $38.45 billion in the 2021 second quarter.

—Read more on S&P Global Market Intelligence.

French banks move to cut costs as profitability comes under pressure

Wage inflation and slowing revenue growth are forcing some of the country's largest lenders to reduce head count following a deterioration in most of the banks' cost-to-income ratios in 2023.

—Read more on S&P Global Market Intelligence.

Japan's regional banks face fresh risks as higher rates may trigger bankruptcies

While Japanese lenders expect to improve their net interest margins due to higher rates, many regional lenders simultaneously face the possibility of some of their customers failing to absorb higher borrowing costs and going bankrupt.

—Read more on S&P Global Market Intelligence.

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Insurance

US individual annuity considerations hit record high in 2023 after 21.5% jump????

The industry logged $347.68 billion in individual annuity considerations in 2023, an increase of about $61 billion from the $286.15 billion seen in 2022.

—Read more on S&P Global Market Intelligence.

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Credit and Markets

US flash PMI data point to lower economic growth and inflation trajectories in Q2

The cooling pace of output growth and fresh declines in new orders and employment point to downside risks for US GDP in the second quarter.

—Read more on S&P Global Market Intelligence.

Costs of owning a car in the US rising ever higher, complicating inflation path

The cost of motor vehicle insurance was up 22.2% in March from a year ago, while repairs increased 11.6% and tolls and parking fees rose 5.3%.

—Read more on S&P Global Market Intelligence.

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Industrials

Europe's chemicals sector braces for new policy impact

The European chemicals sector has faced sharply fluctuating demand conditions and changing policy initiatives since the pandemic, with further disruptions likely in the future.

—Read more on S&P Global Market Intelligence.

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Energy and Utilities

RRA Research: Md. governor to consider handful of energy bills as legislative session ends

The Maryland General Assembly has forwarded to Gov. Wes Moore bills addressing retail competition, energy conservation, offshore wind, time of use rates, generation facility certification and permitting.

—Read more on S&P Global Market Intelligence.

Pivotal role for Europe's grid utilities amid sweeping electrification

As the European utility industry prepares for the first-quarter earnings season, analysts said companies focused on regulated networks stand to benefit given the billions of euros required to build out energy grids.

—Read more on S&P Global Market Intelligence.

US state energy policies upend regulatory oversight, ratepayer advocates warn

As lawmakers push for new energy laws to speed the transition to renewables, or to slow the retirement of coal-fired power plants, traditional regulatory models are shifting. Critics say ratepayers are often lost in the shuffle.

—Read more on S&P Global Market Intelligence.

AI raises cyberrisk for power systems but requires savvy hackers

The broader cyberthreat is becoming more complex due to growing geopolitical tensions, guests told S&P Global Commodity Insights' "Energy Evolution" podcast.

—Read more on S&P Global Market Intelligence.

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Technology, Media and Telecommunications

451 Research: Semiconductor Digest: A roundup of the latest developments

This report provides an overview of activity and events affecting the semiconductor supply chain industry and its competitive landscape. The sector is being driven by geopolitics and demand for generative AI and large language model training.

—Read more on S&P Global Market Intelligence.

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Metals and Mining

Metals and Mining Research: What do UK, US sanctions on Russia-origin metal mean for global nickel market?

The London Metal Exchange banned the delivery of new Russia-origin metal into its warehouses following sanctions imposed by the US and UK for Russia's invasion of Ukraine. Here, we discuss the impact of these developments on the global nickel market.

—Read more on S&P Global Market Intelligence.

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The Week in M&A

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Wintrust's bid for Macatawa Bank marks largest US bank deal of 2024

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Three-quarter decline in terminated PE deals raises hopes of M&A revival

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Large deals drive up value of European power M&A in Q1 as activity slows

Read on S&P Global Market Intelligence ?

Strategic buyers drive tech M&A recovery in Q1

Read on S&P Global Market Intelligence ?

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The Big Number

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