See It Market: Potential Stormy Reporting Season Ahead with Bearish Pre-announcement Trends

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  • here has been a slight uptick in preliminary earnings announcements on Wall Street
  • Management teams are attempting to lower the bar ahead of individual profit reports
  • Traders can use trends in pre-announcements to trade around key earnings dates

Back in September, markets had begun to find their footing after a bruising reaction to a hawkish speech by Fed Chair Powell at Jackson Hole and an unsettling August CPI report. FedEx (FDX) delivered a harsh reality check with its earnings pre-announcement on Sept. 15, however. Following the major Industrials sector company’s preliminary first-quarter outlook that was much less optimistic than what forecasters had been expecting, shares faltered. The broad market arguably took its cue from FedEx, too. The S&P 500 went on to drop more than 10% to its October low.

Bear Market Anxiety into the Q3 Reporting Period

While many other forces were at play to drive broad market volatility, there’s no doubt that earnings season trepidation is front and center. There has been a slew of bearish preliminary earnings announcements from companies big and small amid a quickly shifting economic backdrop. 

For background, along with actual guidance numbers, traders look to preliminaries for a sense of how an earnings season might verify. You can think of it like breadcrumbs leading you down the path of corporate profit trends. Both equity and options traders can benefit by knowing what firms are pre-announcing and when. Corporate executives are always trying to position their company just right ahead of major announcements – like students sitting at the front of the class, making the right impression on the teacher (Wall Street) is critical. Guidance updates are part of that signaling.