Market participants ready themselves for Q2’s earnings season
The S&P 500 and Nasdaq Composite are reaching record highs, but the market's future depends on second-quarter earnings and upcoming inflation data. Earnings season kicks off this week, with PepsiCo and Delta Airlines reporting on 11 July and banks reporting the day after. Analysts predict an 8.8% earnings growth for the S&P 500 but only 4.3% for financials in Q2.
Investors are focusing on future earnings amid high-interest rates and inflation, with financial sector earnings expected to jump over 40% in Q4 and show strong growth in early 2025.
Financial stocks are becoming attractive, but diversification is key. Regional banks may be appealing despite recent challenges in commercial real estate loans, especially in economically strong regions.
The broader economy shows signs of softening, with attention on June inflation data. If the core consumer price index and producer price index figures, which exclude food and energy, continue to move closer to annualised rates of 3%, it would increase the likelihood of an interest rate cut this year. The CME Group's FedWatch Toll has a 25-bps cut at 69% probability, which could influence market volatility. This volatility may present buying opportunities, with the rally possibly expanding beyond tech stocks.
Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.