ETF Outlook for Q2 Earnings

ETF Trends

Second quarter earnings are beginning to cross this week and investors are waiting for signs from corporate America that a recovery could be in the making. Shares and broad market exchange traded funds will be watched closely.

“Currently, only three sectors are expecting to report Q2 EPS growth: Industrials, Information Technology and Consumer Staples. In addition, 25 companies have reported results for Q2 thus far, with 15 beating estimates, 5 missing and five matching,” S&P’s Sam Stovall wrote in a recent note.

Analysts are getting ready for the worst-case scenario. Wall Street analysts are expecting S&P 500 operating EPS to drop by 0.1%, snapping back any gains or growth that has taken place.

The S&P 500 has gained about 7.7% for the year, while the Dow Jones Industrial Average has grown 4.5%. Furthermore, the Nasdaq rallied 12.7% for the year, reports Jill Schlesinger for CBS MoneyWatch. [Bond ETFs Remain Top Draw in June]

SPDR S&P 500 ETF (SPY - News)  was the most popular fund in June, gaining $3.60 billion in assets. SPY is a proxy for the popular S&P 500 index. Olly Ludwig for Index Universe reports that the ETF industry was strong during the second quarter, with equities and bond funds favored. [S&P 500 ETF Forming Bullish Pattern]

Eyes will be on the financial sector, with JP Morgan(JPM - News) closely watched. If JP Morgan reports a big loss, new questions and regulations may arise for the financial sector, reports Daniel Sckolnik on iStockanalyst. Bank of America (BAC - News) is expected to report higher earnings this quarter. [S&P 500 ETF Sees Largest Inflow Since 2008]

“On the surface, one could argue that this is just another example of a slowdown in global economic growth,” Sam Stovall, chief equity strategist at S&P Capital IQ, wrote in a note. “On the other hand, one could say ‘new quarter, old trick,’ meaning that this is merely a continuation of management’s efforts to guide EPS growth estimates to unrealistically low levels.”

Tisha Guerrero contributed to this article. 

View Comments (0)