Earnings are coming: here’s how the market might react

The earnings season is right around the corner.

Naturally, investors are interested in finding out if the corporate results will add to the ongoing rebound in the S&P 500 index.

Earnings could weigh on the market

Unfortunately, though, don’t expect much is the call from Cantor Fitzgerald’s Eric Johnston, who forecasts this earnings season to be a headwind for the U.S. equities. On CNBC’s “Closing Bell”, he said:

Earnings will be a pretty negative catalyst for the market. We saw a little bit of that today from RH, among a couple others. A big part of our bear thesis is a slowdown in growth and it’s going to hit earnings.

Formerly known as Restoration Hardware, RH cited slowdown as it reported lower-than-expected revenue for Q4. The furniture stores company also announced a 3-for-1 stock split.

Lehman sees stock pickers’ market ahead

According to Johnston, the macroeconomic headwinds will weigh on discretionary spending. On the same interview with CNBC, JMP Securities’ Mark Lehmann said he saw the stock pickers’ market ahead.

RH’s earnings call was a warning for other consumer companies. We all know that the next few quarters are going to be difficult for the consumer and the supply chain. So, now you’ll have to pick and choose, you’ll have to pick the winners. We’ll be back to the stock pickers’ market.

Last week, Petco CEO Ron Coughlin said the pet industry will remain resilient through record levels of inflation – one less headwind to worry about.