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Key Insights from Corporate Earnings

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Pre-market futures are down at this hour, but much better than earlier. Last night, reports that Israel’s military had retaliated against Iran’s thwarted missile attack — an unprecedented event, by the way: never before had Iran launched an offensive on its long-time regional rival Israel — in a move many domestic news pundits are worried may foment greater aggression in the region, and opposed to the wishes of the White House. The retaliation now appears to have been narrow and contained, so this morning we don’t foresee the start of a new world war.

Thank goodness for that, of course. The pre-markets, which had seen levels of -300 points on the Dow earlier this morning, are currently down to -21 points, while the S&P 500 is -27 points and the Nasdaq — stemming the red tide a bit — is down -1.6 points. That said, the S&P 500 looks to register its worst weekly performance since the last week of October last year, when indices struck 52-week lows. We’re not back there at this point, but another bad week or two may shift that perspective.

Procter & Gamble (PG - Free Report) has released fiscal Q3 earnings ahead of today’s opening bell, posting a +7% earnings beat to $1.52 per share (from $1.42 in the Zacks consensus) but missing on the top line by -1.4% — to $20.2 billion actual from $20.48 billion anticipated. Shares are down -2% in today’s early trading, even as earnings guidance for next quarter was increased. Lower price points for retail goods may be a headwind for P&G, but a weaker economy does help the interest-rate cut outlook.

American Express (AXP - Free Report) posted beats on both top and bottom lines in its Q1 report ahead of today’s open. Earnings of $3.33 per share easily surpassed the $2.97 in the Zacks consensus, by a margin of +12%. Revenues for the quarter reached $15.8 billion, +0.28% better than the $15.76 billion expected. Strong credit quality (especially relative to other credit card services) has helped push AmEx business past pre-Covid levels, although in-line guidance appears conservative. Shares had been trading lower, but are now breakeven.

Regional bank major Fifth Third Bank (FITB - Free Report) also reported Q1 results this morning. Earnings of 76 cents per share outperformed by a nickel from expectations, while $2.1 billion in revenues notched a +0.75% beat on the top line. This is the company’s fourth-straight earnings beat, but shares are still down at this hour. Regional banks in particular have been taking it on the chin as of late, though FITB shares are off -2% year to date, including this morning’s “sell the news” action.

There are plenty of near-term headwinds in this market. The good news, however, is that valuations for stocks that had spun out into another orbit as of late March have come back to more reasonable levels in the past 2+ weeks. Q1 earnings season picks up the pace as of Monday, with a big PCE report expected a week from today. These results — and Q1 earnings are performing well thus far, overall — will give us a more defined picture on the economy and the Fed’s potential moves on interest rates.

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