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As the government shutdown drags on and official data goes dark, investors are zeroing in on major US banks’ quarterly earnings for clues about where the economy really stands.
What does this mean?
With Wall Street heading into earnings season, the spotlight is firmly on banks like JPMorgan, Goldman Sachs, and Wells Fargo, whose results kick things off this week. Their numbers are seen as a key temperature check for US economic momentum, especially with standard reports like jobs and retail sales sidelined. Even after dipping on renewed US-China trade tensions, the S&P 500 has climbed over 11% this year and nears a three-year bull run — thanks to heavyweight tech and artificial intelligence stocks driving most of the gains. But analysts caution that these lofty valuations hinge on companies actually delivering profit growth. S&P 500 firms are expected to post third-quarter earnings growth of 8.8% compared to last year, per LSEG IBES. Updates from Johnson & Johnson and BlackRock next week will broaden the read to healthcare and asset management. With regular data unavailable, investors are showing more caution, moving cash toward safe havens like gold, silver, and bitcoin instead.
With traditional economic metrics off the table, market sentiment is riding on earnings season. These results are now the go-to tool for investors trying to make sense of inflation trends and consumer strength. Any slip from lofty tech and AI expectations could set off wider market jitters, while demand for defensive assets like gold and bitcoin shows just how much uncertainty is swirling around without clear updates from Washington.
The bigger picture: Data drought puts the spotlight on earnings.
The fate of the bull market — and broader economic outlook — is increasingly tied to strong earnings and a restart of reliable data flow. Top voices from JPMorgan and the IMF point out that future stock gains depend on businesses consistently beating profit forecasts. But if the shutdown drags on, the lack of timely economic info could muddy decision-making for both businesses and policymakers, raising the risk of getting caught off guard by sudden shifts.
