U.S. Corporate Earnings Cast Off Covid Gloom With Rosy Outlooks
(Bloomberg) -- Coca-Cola Co. sees more people buying beverages at stadiums and restaurants. Johnson & Johnson is getting a lift from patients finally undergoing long-postponed surgeries and treatments. United Airlines Holdings Inc. is predicting profits ahead with more passengers booking business travel.
If there’s trepidation in corporate America over the delta variant of Covid-19 sweeping through the country, you wouldn’t know it from the earnings season thus far. Even as the virulent strain has become dominant in the U.S. this month, sending a shudder through markets, executives are gaining confidence that the rebound in consumer and business spending will continue.
“We’re starting to see clearly people return to work or return to normal behaviors throughout the day,” Chipotle Mexican Grill Inc. Chief Executive Officer Brian Niccol said Tuesday on a conference call, pointing to better sales in urban centers during weekdays as a sign of a broad return to the office.
With about one in seven of the Standard & Poor’s 500 Stock Index companies reporting results so far, 86% of the companies have beaten forecasts, according to data compiled by Bloomberg. The S&P 500 rose 0.3% to 4,337.26 at 10:16 a.m. in New York, erasing its losses from earlier this week.
|Today’s Major Earnings:|
Harley Profit Beats Estimates on Resurgent North American Sales
Verizon Tops Subscriber Estimates on Promotions, Raises Outlook
Anthem Boosts Forecast After Health Insurer Tops Estimates
It’s possible that the rise of delta will cause consumers to retrench and shutter themselves again, and that this season’s forecasts will turn out to have been too rosy. But there are signs that the variant isn’t changing the trajectory of the U.S. economy much, in part because the places where it’s rampant don’t contribute much to overall growth, according to Bloomberg Economics.
“While we expect cases to rise, given the vaccination rates they will still remain well below the peak and hospitalizations and deaths will not rise nearly as much,” United Airlines CEO Scott Kirby said Wednesday on a call. “That leads to the logical outcome that the reopening continues on track.”
Demand is recovering more quickly than expected in the U.S., for leisure and business trips, Kirby said. International travel remains constrained by closed borders.
Of course, some companies that thrived during the pandemic are continuing to adjust to the return to normalcy. Netflix Inc. shares were down 4% Wednesday after a disappointing forecast for subscriber growth this quarter, a sign the streaming-TV giant is losing its stronghold on a formerly captive audience.
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