With the Federal Reserve beginning to lower interest rates, earnings season will be a primary driver of stock markets, I believe.

My analysis of this comes ahead of the critical reporting season which moves up a gear next week and as US futures dipped on Wednesday morning as Wall Street seems on track to extend its impressive September gains.

As the Fed, and its global central bank peers including the European Central Bank and the Bank of England, shift gears by lowering interest rates, the spotlight is turning to the broader economy, raising the stakes for the upcoming third-quarter earnings season.

Investors are now eagerly awaiting company reports that will provide crucial insights into how key businesses are doing.

With the recent rate cuts signaling concerns about economic growth, corporate performance and guidance will play a critical role in shaping market sentiment and investment strategies in the coming months.

This move has shifted investor focus from the central bank’s actions to the overall health of the economy.

As interest rates drop, the effectiveness of this monetary easing in stimulating growth and sustaining corporate profitability becomes a key concern for market participants.

While the rate cut provides some relief from borrowing costs, it also indicates that the economic outlook may be less robust than previously thought.

This has raised the importance of corporate earnings reports as investors seek tangible data on how companies are coping with challenges such as changing consumer demand.

Beyond the top-line and bottom-line numbers, the commentary from corporate leaders will be particularly telling. Executives’ perspectives on demand trends, cost pressures, and strategic adjustments will provide deeper insights into the business climate and potential growth opportunities or pitfalls.

As the third-quarter earnings season ramps up, it is likely to bring increased market volatility.

Unexpected earnings results or cautious forward guidance is going to trigger sharp market moves, particularly in sectors most sensitive to economic changes, consumer discretionary, financials, and industrials. Investors should be prepared for a period of heightened activity and adjust their strategies accordingly.

Financials and consumer goods companies typically report early, followed by tech and industrial firms.

This earnings season will be the true barometer of economic health.

As companies report their results, the narratives they share will carry more weight than any central bank policy change.

The earnings we see in the coming weeks will not only illuminate the resilience of businesses, but also provide crucial insights for investors facing this transitional phase.

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London-born Nigel Green is founder and CEO of deVere Group. Following in his father’s footstep, he entered the financial services industry as a young adult. After working in the sector for 15 years in London, he subsequently spent several years operating within the international space, before launching deVere in 2002 with a single office in Hong Kong. Today, deVere is one of the world’s largest independent financial advisory organizations, doing business in 100 countries and with more than $12bn under advisement. It specializes global financial solutions to international, local mass affluent, and high-net-worth clients. In early 2017, it was announced that deVere would launch its own private bank. In addition, deVere also confirmed it has received its own investment banking license.