What’s going on here?

Analysts were predicting the final quarter of 2024 to be the best one in three years for US companies and – drumroll, please – the results are starting to come in.

What does this mean?

Professional analysts forecast how much companies will earn each quarter. And for the fourth quarter of 2024, they estimated that S&P 500 firms would report profit almost 12% higher than the year before, on average. If they turn out to be right, that’d be the biggest jump in earnings since the end of 2021. The number-crunchers were especially optimistic about Wall Street’s big banks (nailed it), communication services, information technology, and consumer discretionary firms. But they weren’t expecting great shakes from energy companies, materials firms, or industrials. In fact, they predicted that profit in all three sectors would shrink versus the same time last year.

Why should I care?

For markets: Underpromise and overdeliver.

S&P 500 companies that report higher-than-expected profits tend to see their stocks swell by an average of 1%, while those that fall short usually watch their stocks wither by 2%. So instead of putting in the extra work, companies might be tempted to appear a little more downtrodden than they really are throughout the quarter. That way, analysts expect less, and – voilà – investors are impressed when the results roll in.

For you personally: What to expect when you’re expecting.

Short-term moves are common after earnings, but plenty of stocks will level out when the excitement dies down. So before you make any long-term decisions, assess why the company did better or worse than expected. Then scan through the latest data to see what might be next for it, before updating your forecasts and figures. If you’re still sweet on the stock, you might be onto a winner.

What’s going on here?

China’s economy outran predictions at the tail end of 2024, expanding at its fastest pace in almost two years – just enough to hit the country’s 5% annual growth forecast.

What does this mean?

The world’s second-biggest economy grew by 5.4% in the fourth quarter of 2024 compared to the same period a year earlier, helped along by a raft of last-ditch stimulus measures. And that expansion was considerably stronger than expected. Analysts had penciled in growth of 5%, which alone would have marked a hefty pickup from the previous quarter’s 4.6%. But, despite this blast of momentum, China still faces some heavy economic challenges – not least the US president-elect's heavy proposed tariffs on its goods.

Why should I care?

For markets: A tentative rally.

With all the pent-up worries about China’s economy, you might’ve expected those strong growth figures to shoot the lights out, markets-wise. But investors’ reaction to the fiery quarter was… anything but. The country’s “blue-chip” stock market index, the CSI 300, perked up modestly. Its currency – the yuan – edged higher against the US dollar. And its 10-year government bond yields dipped slightly, as demand for those assets popped higher (remember, as bond prices rise, their yields fall).

The bigger picture: The slow march… to March.

All the stimulus announced last year should help consumers and businesses drive growth this year. And with China’s important Lunar New Year just weeks away, some investors may be waiting to see if spending and economic activity see a celebratory boom. Still, plenty of analysts think those government measures are going to fall short of what’s needed. The country isn’t slated to specify its new economic targets until March, but most analysts are figuring it’ll aim for 5% growth again. And with China’s sprawling economy, any deviation from that will have far-reaching, global, effects.