Stock futures were closely closed at least on Monday evening, as investors awaited a slew of new earnings results to determine the impact of ongoing supply chain concerns and rising costs on corporate America.
A number of main companies will report earnings results Tuesday morning, including consumer giants Procter Gamble PG and Johnson Johnson JNJ before the market open, and Netflix NFLX and United Airlines UAL after the market close.
The latest quarterly results, guidance and executive commentary from these companies are intended to help illustrate the extent of how labor shortages, growing input costs and lingering Pandemic-related concerns have weighed on companies and whether some firms have managed to more successfully navigate this confluence of challenges.
We are dealing with Supply Chain challenges because of the unique situation that we're in right now, where we unleashed a lot of demand before businesses were really ready for it. That could remain for some time, drive volatility, raise concerns, said Brian Levitt, a managing partner of Invesco Global Markets in North America, on Monday at Yahoo Finance Live. However I think the supply-demand imbalances will moderate, enabling this cycle to continue. What you want to hear from businesses are those that continue to believe that demand is going to be strong and continue to believe that they have some ability to pass on some of the supply challenges and work some of those costs to consumers, he added. It is not a rising tide that lifts all boats type of environment. It s an economy that s likely to slow down some in here and pricing pressures are going to be with us a bit Those businesses that can pass these costs on are going to be the winners. The companies who have so far posted better-than-expected earnings results — including the big U.S. banks and an assortment of other names like Domino's Pizza DPZ and Delta Air Lines DAL -- have largely reported third quarter profits. Heading into this week, 8% of S&P 500 companies had reported third-quarter results, and 80% of these firms had topped consensus estimates, according to FactSet.
6. m. ET Monday: Stock options point to a lower openSavita subramian pointed out in a note on Monday that many of these companies had relatively low foreign sales exposure, or less than one-fiveth of their overall revenue from international sources. The coming earnings reports from companies with greater dependence on international sales may provide an even more detailed view of the impact of global supply chain challenges.
Supply chain concerns are very real, Wells Fargo CEO and President Andy Serwer told Yahoo Finance’s Editor-in Chief Charles Scharf a panel at the Milken Institute Global Conference on Monday. Inventory levels are down and people find ways to compensate for that. So profit levels are very, very high because people are raising prices so there is inflation how long that goes on for we can debate, but it is very real. The Supply Chain Problems aren't going to be solved overnight, he added. They will get solved, but until then, I certainly worry about the evenness of whether small businesses versus large businesses continue to have the same trajectory.