Expectations high as reports come in; investors ask what is next?

NEW YORK — Forget about “What have you done for me lately?” The big question investors will be asking companies this upcoming earnings season is: What will you do next?

Companies are lining up to tell investors how much they made during the last three months of 2018, and the reports get going in earnest this upcoming week with Citigroup and a slew of other banks on deck. Expectations are high, and Wall Street is forecasting a fifth straight quarter where profit growth topped 10 percent for S&P 500 companies.

Markets could use some encouragement following the worst December for stocks since the Great Depression. But investors are likely less interested in companies’ performance over the last three months as what they have to say about the trends for 2019.

Economic growth around the world is expected to slow this year, and rising payroll costs could be eating into company profits. Trying to judge the impact on profits, investors will pay more attention to the conference calls that CEOs hold with analysts and shareholders after reporting their quarterly results.

“The market is going to be very focused on the calls,” said Ernie Cecilia, chief investment officer at Bryn Mawr Trust. “It’s going to be about revenue expectations and margins more than anything.”

Analysts have been expecting profit growth to slow for companies in 2019 following their blowout 2018, when the first year of lower tax rates provided a big, one-time boost. Wall Street has been slashing its forecasts for 2019 profit growth in recent weeks.

Without the tax benefit, companies need to either drum up more revenue or extract more profit from each $1 in sales to push their profits higher. And some big name companies have cited pain caused by other challenges, such as the global trade war.

Companies are finally giving bigger pay raises to their employees. After years of sluggish gains, workers’ hourly earnings rose 3.2 percent last month for the strongest growth since 2009.