By Caroline Valetkevitch
NEW YORK (Reuters) – Investors are looking to see if technology companies and related complexities will add to recent strong gains and whether growth will expand in other sectors as corporate America prepares to report on the final quarter of another stellar year for Wall Street.
They also want to hear what US companies have to say about the potential impact in 2025 of proposed tariffs, waivers and tax policies under the new administration of President Donald Trump.
The fourth quarter of 2024 US acquisition period begins next week, with some of the largest US banks, including JPMorgan Chase (NYSE: ) and Wells Fargo (NYSE: ), is expected to report results on Wednesday.
Analysts expect total companies to increase earnings by 9.6% in the fourth quarter of 2024 compared to the same period last year, which would be slightly better than earnings growth of 9.1% in the third quarter of last year, according to data compiled by LSEG.
The S&P 500 rose 23% in 2024, its second straight year of gains exceeding 20%, fueled in part by sharp gains at Nvidia (NASDAQ: ), Microsoft (NASDAQ: ) and other US megacap companies leading the smart technology race. . Telecommunications services, which includes companies such as Alphabet (NASDAQ:), and information technology had the largest sector gains in 2024.
Even after a rough start to 2025, the S&P 500 trades at 21.5 times forward earnings, which is expensive compared to the 10-year average price of earnings of about 18, based on LSEG data.
“We've had a lot of expansion over the last few years. We need to see profits follow, so it will be important what these companies say about their fundamentals,” said Anthony Saglimbene, a market strategist. Ameriprise Financial (NYSE: ) in Troy, Michigan.
Expectations are high for big names related to technology, so they should deliver high results, he said, but “many sectors of the economy are expected to see profit growth start to accelerate, and that could start” with the upcoming fourth quarter results.
Telecommunications services and technology companies dominated revenue in 2024, and are expected to experience significant growth in the fourth quarter as well, LSEG data shows. But the currency sees higher growth in the fourth quarter of 2024 as well, with estimated quarterly gains of 17.5%.
And profit growth is expected to increase in 2025, with advanced healthcare and technology, and strong growth seen in business, equipment and energy compared to 2024, based on LSEG data.
“Growth rates are picking up from 2024 to 2025,” said Stephanie Lang, chief investment officer at Homrich Berg in Atlanta, and “what we see as positive is wage growth.”
Market watchers are eager to hear from company executives about potential policy changes after Trump takes office in Jan.
Some of Trump's plans, especially those with higher taxes, could raise consumer prices, while potential deregulation under the new administration could influence earnings growth in financial and other sectors.
CNN reported on Wednesday that Trump is considering declaring an economic emergency to provide legal justification for a massive set of tariffs across the country on allies and enemies.
“Obviously there's a lot of uncertainty right now, and the timing of the taxes and the cadence in which they're released is very important,” said Timothy Chubb (NYSE: ), chief investment officer at Girard, a division of Univest Wealth based in King of Prussia, Pennsylvania.
“I'm also interested in the color we can get from banks with deregulation,” he said.
Also, uncertainty about how many more times the Federal Reserve can cut interest rates in its current cycle of cuts is likely to weigh on corporate views about the strength of consumers and the US economy, which has so far defied expectations of a slowdown.