LIVE MARKETS-Solid quarter but, look under the hood and ahead

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SOLID QUARTER BUT, LOOK UNDER THE HOOD AND AHEAD

With the S&P 500 .SPX quarterly earnings season drawing nearer to the finish line, LSEG analyst Tajinder Dhillon's tally showed some solid growth despite uncertainty around U.S. trade policies and some notable divergences under the hood.

With around 476 of the 500's reports in, first quarter year-over-year earnings growth is expected to come in at 14%, and excluding energy .SPNY it would be 16%. Revenue growth is now seen to be 5%, or 5.4% excluding energy.

Perhaps encouragingly, 76.1% of companies reported earnings above consensus versus the long-term average of 67% with EPS 6.5% above expectations, which is higher than the average long term surprise factor of 4.3%.

However, under the hood there was a big difference between the strongest and the weakest. Healthcare .SPXHC blew everybody else out of the water with a 46% growth rate followed by 31% for communication services .SPLRCL. But on the other side of the coin, energy earnings fell 16.6% followed by a 7% drop in real estate .SPLRCR earnings.

On the revenue front, 62.7% of companies beat the Street compared with the long-term average of 62% beats.

But, LSEG says the revenue beat for the quarter, at 0.9%, lags the long-term average surprise factor of 1.3% and the 1.2% average surprise factor for the prior four quarters.

And on another cautious note, Dhillon said that for Q2, 58 companies made 58 negative EPS pre-announcements compared with 38 positive forecasts.

The data, issued Friday came ahead of a holiday shortened week in which only 13 of the benchmark index companies are expected to report.

The lull gives investors room to focus on Wednesday's hotly anticipated report from AI chip darling Nvidia NVDA.O.
Investors will watch for any details on the impact of U.S. chip curbs on China after the Trump administration last month put export limits on Nvidia's H20 chip, which the company said would result in $5.5 billion in charges.

However Nvidia will launch a new AI chipset for China at a significantly lower price than the restricted H20, Reuters reported on Monday citing sources familiar with the matter.

(Sinéad Carew)

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