As earnings season rolls into its heart, hopes rise for broader gains

abcnews.go.com:

Last year, a handful of Big Tech stocks were behind much of corporate America’s profit growth

NEW YORK — As the heart of earnings reporting season arrives on Wall Street, investors hope that many more voices will be joining the chorus of companies reporting stronger profits.

Last year, Big Tech stocks were behind much of corporate America’s profit growth, and thus behind the majority of the gain for the S&P 500. Just seven companies accounted for all of the U.S. market’s profit expansion over the last four quarters, according to UBS.

But as defense contractors and other big industrial companies line up to report their latest results, the hope is that profit growth will broaden out to a wider range of companies.

Consider General Dynamics, which reports results Wednesday. Analysts forecast its earnings per share jumped nearly 12% from a year earlier, according to FactSet. That would be a big acceleration from last year’s first-quarter growth of roughly 1%. The company is expected to benefit from solid demand for its Gulfstream business jets and from European defense agencies.

Or Waste Management, which reports on Thursday. Analysts expect it to show an acceleration in profit growth to 15.3% from 1.6%. They say it’s benefiting from higher prices for its collection and disposal services.

Give credit to the remarkably resilient U.S. economy, which continues to hum despite high interest rates meant to bring inflation down. The expectation is that strength should translate into stronger revenues for companies broadly, which in turn should convert them into profits.

“This recovery in sectors beyond tech is part of the broadening out of stock index performance that we expected,” strategist at BlackRock Investment Institute wrote