Wall Street Week Ahead: With stocks at record highs, investors look to upcoming earnings

FILE PHOTO: A sign for the Wall Street subway station is seen in the financial district in New York City, U.S., August 23, 2018. REUTERS/Brendan McDermid/File Photo/File Photo

NEW YORK (Reuters) – Wall Street is kicking off a crucial reporting season as U.S. companies provide quarterly results a year after the coronavirus pandemic crippled the economy and as investors look for reasons to support a stock market at record highs.

Results begin in earnest next week with major banks. Overall S&P 500 earnings are expected to have jumped 25% in the first quarter from a year ago, according to IBES data from Refinitiv.

That would be the biggest quarterly gain since 2018, when tax cuts under former President Donald Trump drove a surge in profit growth.

With the S&P 500 index at record highs, valuations are stretched heading into the season, leaving some investors looking to earnings for further support.

“We’ve seen earnings estimates go up, but… when you look at the market price as a multiple of those forward earnings, it has stayed pretty steadily at around 22 times,” said Brad McMillan, chief investment officer at Commonwealth Financial Network.

“If we’re going to see significant moves going forward, it’s going to come from earnings.”

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