Trump's Impact and Company Growth as US Firms Approach Q4 Reports

As corporate America gears up to unveil its Q4 earnings, investors are keenly observing whether technology companies and influential players will contribute to the robust profit increases seen recently. Additionally, there is interest in whether this growth trend will extend to other sectors.

The earnings season for the fourth quarter of 2024 is set to commence next week, with major banks, such as JPMorgan Chase and Wells Fargo, slated to report on Wednesday.

Analysts are forecasting an overall earnings increase of 9.6% in the fourth quarter of 2024 compared to the same period last year. This projection surpasses the 9.1% growth recorded in the third quarter of last year, based on data from LSEG.

The S&P 500 saw a remarkable rise of 23% in 2024, marking its second consecutive year of gains exceeding 20%. This uptrend has partly been fueled by significant advancements in companies like Nvidia and Microsoft, which are at the forefront of artificial intelligence technology. The sectors of communication services, including companies like Alphabet, and information technology experienced the most substantial growth in 2024.

Despite a shaky start to 2025, the S&P 500 is currently trading at a ratio of 21.5 times forward earnings. This valuation is relatively high when compared to the 10-year average price-to-earnings ratio, which stands around 18, according to LSEG data.

As stated by Anthony Saglimbene, chief market strategist at Ameriprise Financial, “We’ve had a lot of multiple expansion in recent years. It is crucial to see profits reflect these advancements, making the insights from these companies about their basic conditions vital.”

There are high expectations for major tech companies, and thus, positive results are crucial. Saglimbene added, “More sectors of the economy are anticipated to witness an increase in profit growth, potentially starting with the results from the forthcoming fourth quarter.”

In 2024, communication services and technology firms were the primary contributors to earnings growth, and they are expected to continue this trend in Q4. Financials are projected to lead in profit growth for the fourth quarter of 2024, with estimated gains of 17.5%.

Further, expectations for 2025 point to an expansion in profit growth across various sectors, with healthcare anticipated to lead alongside technology. The industrial, materials, and energy sectors are also expected to show considerably stronger growth compared to 2024, based on LSEG data.

Stephanie Lang, chief investment officer at Homrich Berg, remarked, “Growth rates are on the rise from 2024 to 2025, and the broadening out of earnings is seen as a positive sign.”

Market analysts are especially interested in hearing from company executives concerning potential policy shifts following the inauguration of President-elect Donald Trump on January 20.

Some of Trump’s proposed initiatives, particularly concerning increased tariffs, may drive consumer prices higher. On the other hand, reduced regulation under his administration could potentially promote earnings growth in the financial sector and others.

According to CNN, Trump is contemplating an option to declare a national economic emergency to enable universal tariffs on both allies and adversaries.

Timothy Chubb, chief investment officer at Girard, noted, “There is considerable uncertainty ahead, and the timing and rollout of tariffs are critical factors.” He also expressed interest in what banks might share regarding deregulation.

Additionally, uncertainty persists regarding the number of interest rate cuts the Federal Reserve may implement in its current easing cycle. This situation is likely to heighten attention on company statements regarding the strength of consumers and the resilience of the U.S. economy, which has shown unexpected strength despite concerns over a potential slowdown.

Trump, Growth, Earnings