Earnings season intensifies as PayPal and Corning shares slide

PayPal and Corning shares declined as earnings season gained momentum, reflecting the heightened scrutiny on corporate results. Major corporations including SK Hynix, Visa, Coca-Cola, Boeing, and Ford reported results on Tuesday, with Arm Holdings, ExxonMobil, and Chevron scheduled to report later in the week.

Market attention is now focused on Big Tech earnings from Microsoft, Meta Platforms, Apple, and Amazon.com on Wednesday and Thursday. This comes following a tech sector downturn triggered by Alphabet and Tesla's recent reports, which sent the sector into a tailspin.

Analysts estimate S&P 500 second-quarter earnings growth at 23.2 per cent year-on-year, according to FactSet data. This figure exceeds historical averages, marking the seventh consecutive quarter of double-digit growth and the second consecutive quarter above 20 per cent. The five-year average for S&P 500 earnings growth stands at 16.4 per cent, while the ten-year average is 10.3 per cent.

The broader market context includes the Federal Reserve beginning its two-day policy meeting on Tuesday, with traders expecting interest rates to hold steady, although a rate hike remains a possibility. In South Korea, the Kospi index tumbled more than 10 per cent due to a sell-off in semiconductor manufacturers SK Hynix and Samsung Electronics, reflecting investor caution regarding AI-related stocks.

Ford reported a 10.3 per cent drop in US second-quarter sales, driven by declines in electric vehicle demand and lower F-Series and SUV volumes. Meanwhile, Amazon.com previously reported fourth-quarter fiscal 2025 results with $213.4 billion in revenue and $25 billion in operating income, beating expectations. Amazon shares rose 31.9 per cent in a month following that report, driven by strong investor demand and institutional buying. UPS recently beat earnings expectations and raised full-year guidance, navigating macroeconomic pressures that have affected other industrial sectors.