The fourth-quarter 2024 earnings season will kick off next week, with banking sector players due to report numbers. The overall picture ahead of this reporting cycle is one of continued resilience and a steadily improving outlook.
According to the latest Earnings Trends report, total S&P 500 earnings are expected to be up 7.4% from the year-ago period on 4.8% higher revenues. Estimates have steadily increased since the start of the period but the magnitude of estimate cuts is significantly lower than in comparable recent quarters.
Of the 16 Zacks sectors, nine are expected to post significant earnings growth in the fourth quarter, with the strongest gains in the Technology sector (14.9%), followed by Finance (12.7%), Medical (12.3%), Consumer Discretionary (8.1%), Retail (7.2%) and Business Services (7.2%) (read: 5 Best-Performing Sector ETFs of Q4).
The Technology sector has been a significant growth driver in recent quarters, and the trend is expected to continue in the fourth quarter and beyond. Technology sector fourth-quarter earnings are expected to be up 14.9% from the same period last year on 10.4% higher revenues. This will represent the sixth consecutive quarter of double-digit earnings growth.
Fourth-quarter earnings of the “Magnificent 7,” which now represents a large part of the S&P 500 Index, are expected to be up 20.9% from the same period last year on 12.3% higher revenues (read: Can "Magnificent Seven" ETFs Retain Their Glory in 2025?).
Stay up-to-date with all quarterly releases:See Zacks Earnings Calendar.
We have highlighted an ETF each from the abovementioned sectors that could make great plays as the earnings season unfolds.
Technology: Roundhill Magnificent Seven ETF (MAGS)
Roundhill Magnificent Seven ETF is the first-ever ETF that offers investors equal-weight exposure to the “Magnificent Seven” stocks. It has amassed $1.8 billion in its asset base and charges 29 bps in fees per year. MAGS trades in an average daily volume of 1.6 million shares.
Finance: SPDR S&P Bank ETF (KBE)
SPDR S&P Bank ETF offers equal-weight exposure to 95 banking stocks by tracking the S&P Banks Select Industry Index. Regional banks dominate the portfolio with a 70.9% share, while diversified banks, commercial & residential mortgage finance, diversified financial services and asset management & custody banks take the remainder. SPDR S&P Bank ETF has amassed $2.3 billion in its asset base while trading in a heavy volume of 2 million shares a day, on average. The product charges 35 bps in annual fees and has a Zacks ETF Rank #2 (Buy) (read: 5 Top-Ranked ETFs to Buy Cheap).
Healthcare: Health Care Select Sector SPDR Fund (XLV)
Health Care Select Sector SPDR Fund is the most popular healthcare ETF with an AUM of $37.6 billion and an average daily volume of 7 million shares. It follows the Health Care Select Sector Index and holds 61 securities in its basket. Pharma takes the largest share at 30.6% from a sector look, while healthcare equipment and supplies, healthcare providers and services, biotech, and life sciences tools & services have double-digit exposure each.
Health Care Select Sector SPDR Fund charges 9 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
Consumer Discretionary: Consumer Discretionary Select Sector SPDR Fund (XLY)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space and tracks the Consumer Discretionary Select Sector Index. It holds 50 securities in its basket, with key holdings in hotels, restaurants and leisure, broadline retail, specialty retail, and automobiles with a double-digit allocation each.
Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $22.8 billion and an average daily volume of around 3 million shares. It charges 0.09% in expense ratio and has a Zacks ETF Rank #2.
Retail: VanEck Vectors Retail ETF (RTH)
VanEck Vectors Retail ETF provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. VanEck Vectors Retail ETF is highly concentrated on the top firm with double-digit exposure, while the other firms hold no more than 8.8% share.
VanEck Vectors Retail ETF has amassed $221.4 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 5,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #3 (Hold).
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Health Care Select Sector SPDR ETF (XLV): ETF Research Reports
VanEck Retail ETF (RTH): ETF Research Reports
SPDR S&P Bank ETF (KBE): ETF Research Reports
Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports
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