S&P500 Q3 Earnings: Next Week Offers Consumer, Industrial Giants

This week we have the usual slow start to the earnings season with few releases. Most notable was Alcoa's disappointing release, highlighting the continued pressure in the global economy driven by a weaker China. The interim update from Chevron was not pleasant reading: earnings are expected to be substantially lower, compared to 2Q and investors punished the stock sending it down 4.3 percent in heavy trading.

Today J.P. Morgan Chase released its Q3 results before the opening, and they were an impressive beat, at 1.40 vs. 1.20 estimated. The 1.40 included a lot of special items, so it may not be as exciting as it looks. Nevertheless, J.P. Morgan says it feels U.S. housing has turned a corner.

Next week the party really starts, with multiple giants reporting (see PDF list at the bottom of this article).

Monday: Citigroup is expected to report EPS of 0.97, down 21.2 percent from one year ago. EPS estimates are unchanged over the last three months. The bank has a recent tendency to underperform its peers and this trend is likely to continue until the turnaround currently in progress has streamlined the operations.

Tuesday: First big earnings release day in the 3Q season. Four companies are worth following; IBM, Johnson & Johnson, Coca-Cola and Intel. Of the four companies, IBM is expected post to the highest earnings growth, around 9.9 percent from last year. Intel, on the other hand, is expected to see EPS slip by 24.1 percent compared to last year, with most of this change in the EPS estimate coming in the last three months. These four companies are important, as they give a good comprehensive indication of consumer sentiment (J&J and Coca-Cola) while IBM and Intel are a good gauge of corporate spending.

Wednesday: Investors will look out for releases from PepsiCo, Bank of America and American Express. The two latter combined will give insight into consumer credit formation in the US economy, and we expect them to show solid progress as the US economy continues to improve.

Thursday: The two technology behemoths Microsoft and Google are expected to release after the close. There are high expectations for Google in particular: it is expected to grow EPS by an impressive 26.5 percent, driven by the continuing shift in overall marketing spending from offline to online.

Friday: This day is all about industrials with the large US industrial companies GE and Honeywell reporting earnings. Despite a difficult global macro picture, GE is expected to report EPS of 0.36, up 17.1 percent from last year. Other important releases on Friday are Schlumberger and McDonald's.