Kicking Off the New Year With a Bang: DealBook Briefing

The Standard & Poor’s 500 index rose 2.6 percent after posting four straight records during the holiday-shortened week. That was its best start to a year since 2006.

Tech stocks surged 4.2 percent to begin the New Year.

Here’s what to expect this earnings season.

Fourth-quarter earnings season kicks off next week with JPMorgan, Wells Fargo & Co. and BlackRock all reporting Friday. Here’s what Wall Street analysts are expecting, courtesy of FactSet.

Analysts expect companies in the Standard & Poor’s 500 index to report profits rose 10.5 percent from a year ago, according to FactSet.

• All 11 sectors are forecast to report earnings growth.

• The index’s energy companies are expected to show the biggest jump, up 132 percent. That increase is largely a result of the continued rebound in oil prices. The two-year free-fall in oil prices that began in 2014 decimated the bottom line of energy companies, but since the second half of last year, the sector’s profits have been rebounding.

• If analysts forecast for earnings prove correct, it will mark the third quarter in the past four that the S.&P. 500 has posted double-digit gains in earnings.

• Sales are forecast to grow 6.7 percent.

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Jerome Powell

Credit
Joshua Roberts/Reuters

How many rate increases next year?

Most Federal Reserve officials expect to raise rates three times this year. A number of private economists, including Goldman Sachs’s Jan Hatzius, are forecasting four.

The market, meanwhile, has priced in only two. The Fed, though, could surprise investors to the upside, writes Christopher Beddor of Breakingviews.

“December’s relatively weak jobs and wage growth figures give policymakers a breather. But with 2.1 million jobs created in 2017 and unemployment nearing historically low levels, long-awaited wage rises — along with new tax cuts — might soon bring the prospect of higher inflation on the agenda.”

Mr. Beddor added:

“The question is how much tighter the job market can get before pulling wages, and inflation, higher. Minutes from the December FOMC meeting, released this week, suggest some members worry tighter labor market conditions could start feeding into inflation. The readout also showed uncertainty about the extent that tax cuts might stimulate the economy and boost prices. Already companies including AT&T, American…

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