Stocks were wobbling between small gains and losses in early trading Monday ahead of a wave of earnings reports from big U.S. companies coming out this week.
The S&P 500 index was up 0.1% as of 10 a.m. Eastern. The Dow Jones Industrial Average was up 0.2% and the Nasdaq composite was down 0.2%. On Friday, the S&P 500 rose 1.1% to a fresh record, rebounding from the previous day’s loss.
Earnings season kicks off this week. The big Wall Street banks report their results starting Tuesday starting with JPMorgan Chase and Goldman Sachs. Also reporting this week will be Bank of America, Citigroup and Wells Fargo. A handful of other big companies report this week, including Delta Air Lines, PepsiCo and UnitedHealth Group.
Expectations are high this quarter for publicly traded companies. The pandemic is waning, and all of the United States effectively reopened again in the last quarter as vaccine availability became widespread. Investors will be looking to see not only what sort of profits these companies brought in the last three months, but also what their outlook is now that things are normalizing.
Corporate earnings are expected to be up 64% from a year earlier, according to FactSet. That would be the biggest year-over-year growth since 2009, when corporate profits started recovering from the Great Recession.
Ultimately investors are going to need these companies to deliver this season. Stocks have risen sharply in the past year on the backs of expectations that corporate profits would rebound once the pandemic ends. Without strong profits, it will be increasingly difficult for investors to justify these high stock prices and record market valuations.
As investors keep an eye on corporate earnings, there are also lingering worries about the highly contagious delta coronavirus variant that is spreading quickly across much of the world. Places in the U.S. being hit particularly hard by the delta variant include the South, where vaccine hesitancy and resistance is more common. There are some worries that these areas may have to reimpose restrictions.