What's next after first rate cut? Markets look to earnings

Markets have rallied since the Federal Reserve's first rate cut in more than a decade, but investors are now looking to corporate earnings to see if the economy can continue to grow.

The S&P 500 index has risen more than 5% since the Fed cut rates on July 31, and the Nasdaq Composite index has gained more than 7%. Investors have been encouraged by the Fed's dovish tone and its willingness to cut rates to support the economy. However, the market rally could be short-lived if corporate earnings disappoint. Earnings season begins in earnest next week, with major banks reporting their results. Investors will be looking for signs that companies are still able to grow their profits despite the economic slowdown.

If earnings are strong, it could provide a further boost to the market. However, if earnings disappoint, it could trigger a sell-off.

Here are some key things to watch for during earnings season:

• Revenue growth: Investors will be looking for companies to show that they are still able to grow their revenue, even in the face of economic headwinds.
• Profit margins: Investors will also be looking for companies to maintain their profit margins. If profit margins are declining, it could be a sign that companies are having to cut prices to boost sales.
• Earnings per share: Ultimately, investors will be looking for companies to deliver strong earnings per share. This is a measure of how much money a company is earning for each share of its stock.

Earnings season will be a critical test for the market. If earnings are strong, it could provide a further boost to the market. However, if earnings disappoint, it could trigger a sell-off.