Second-quarter earnings season will kick off in July, with investors eager to see how the wide-reaching impact of the COVID-19 outbreak will continue to affect corporations.
Business Insider spoke to three experts who laid out where they think investors should be looking and putting their money ahead of likely market fluctuations.
Some of the recommendations are pegged to industry fundamentals, while others look to capitalize on pricing dislocations created by post-coronavirus market turbulence.
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When asked which industries investors might expect to report strong earnings this quarter, ClearBridge Investments’ Michael Clarfeld laughs.
“I’m laughing because it’s difficult to forecast these things normally, but it’s incredibly difficult now,” he said, citing the potential economic impact of recent spikes in COVID-19 cases in various states around the US, which have led firms like Apple to temporarily re-close stores.
Clarfeld, who is a managing director and a portfolio manager at ClearBridge Investments, is not alone in his perplexity. Dozens of companies have themselves suspended guidance amid an increasingly uncertain economic environment.
Meanwhile, gauges on the economy have been mixed in recent weeks. The Commerce Department reported Friday that consumer spending – the driving force underpinning the U.S. economy – rose more than 8% in May after falling the most on record in April, although spending levels are still far below pre-coronavirus marks.
But the recent surges in COVID-19 cases cast uncertainty on how sustainable the upward swing is, and other indicators remain lackluster: Income dropped 4.2% in May and unemployment still remains relatively high at 13.3%.
Accordingly, some investors are giving less weight to earnings in the near future, at least until economic indicators begin consistently returning to healthier levels.
“Earnings, I would argue, …read more
Source:: Business Insider