HSBC Outlook for US Stocks Q4 Earnings Report Season: S&P 500 Profit Outlook Positive, "Seven Giants" Leading the Pack, Winners and Losers Revealed

The fourth quarter financial reporting season of 2024 has kicked off. HSBC HOLDINGS released a research report stating that the earnings expectations for the S&P 500 index in the fourth quarter of 2024 have been revised downwards in the past few months, but the year-on-year growth expectation is still about 12% (lower than the previously expected 15%), making it one of the highest earnings growth expectations since the first quarter of 2022. HSBC stated that with the help of a low base, most industries are expected to see strong year-on-year earnings growth, with some industries (such as finance, communication services, technology, non-essential consumer goods, healthcare) expected to achieve double-digit earnings growth. However, HSBC pointed out that from a quarter-on-quarter perspective, the earnings growth expectation is only 0.6%, remaining flat; most industries are expected to see a quarter-on-quarter decline in earnings; the technology industry remains an "outlier," with strong expected earnings growth quarter-on-quarter, with an expected increase of 24%. HSBC stated that the earnings growth of the "Big Seven" in the US stock market - Apple Inc., NVIDIA Corporation, Microsoft Corporation, Alphabet, Meta, Tesla, Inc., Amazon.com, Inc. - is still expected to exceed the earnings growth of the other 493 constituent companies in the S&P 500 index. Their earnings per share are expected to increase by 23%, which is higher than the 9% expected for the other companies, continuing the trend of earnings recovery over the past few quarters, but the gap is narrowing. HSBC added that for the fourth quarter of 2024, earnings growth will be supported by strong expectations in the financial industry (expected to grow by 39% year-on-year), communication services (expected to grow by 23% year-on-year), and IT (expected to grow by 15% year-on-year); energy stocks will continue to drag down earnings growth; essential consumer goods, industrial stocks, and utility stocks are expected to remain flat or slightly decline in earnings. In addition, HSBC also provided a list of potential winners and losers in the fourth quarter financial reporting season. Winners (Buy rating): Amazon.com, Inc. - Continued cost reduction and efficiency improvement are expected to continue to impact all submarkets, with strong growth expected in Amazon.com, Inc.'s cloud computing (AWS) and advertising businesses. Bank of America Corp - A long-term winner in the Bank of America Corp industry, with a clear path to sustainable operational leverage; management's outlook has strengthened expectations for continuous growth in net interest income (NII) until 2025, boosting investor confidence. Hilton Worldwide Holdings Inc - Hilton Worldwide Holdings Inc remains one of the most popular companies in the industry due to its global diversification, extensive coverage of submarkets, and strict execution. Intuitive Surgical, Inc. - Industry leader in Siasun Robot & Automation surgery. Driven by general surgical procedures in the US and worldwide, its surgical volume is expected to maintain resilient growth. Martin Marietta Materials, Inc. - Weather-related demand interruptions seem to have a lesser impact on fourth-quarter performance, and performance guidance for 2025 may be stronger than expected. Oracle Corporation - Due to the continued strong performance of Oracle Corporation's cloud infrastructure (OCI), the company's revenue and profit margins are expected to exceed market expectations. Royal Caribbean Cruises - Positioned accurately in providing customer experience in an innovative way; the products offered may drive market share growth and attract new customers to its vacation ecosystem. Losers (Downgrade rating): AMD - The company is expected to face more unfavorable factors, and its artificial intelligence (AI) GPU roadmap may not be as competitive as previously imagined.