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Insight Weekly: Stocks endure more pain; bank branch M&A slows; debt ratios fall

Today is Tuesday, October 11, 2022, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly

In this edition of Insight Weekly, we continue to examine U.S. stocks. The bear market risks declining further if third-quarter earnings fall short of optimistic outlooks. S&P Global Market Intelligence economists forecast that S&P 500 earnings per share will decline in 2022 and grow modestly in 2023. The strength of the dollar has impacted stocks with overseas exposure: the S&P 500 Foreign Revenue Exposure Index fell more than 28.9% from the start of 2022 to the end of September, according to S&P Dow Jones Indices. The Federal Reserve continues to tighten monetary policy to constrain inflation, causing the median return for major U.S. bank stocks to fall to negative 4.3% in September.

Only 15 U.S. bank branch acquisition deals have been announced in 2022 as of Sept. 28, down from 44 in all of 2021, according to an analysis by S&P Global Market Intelligence. Digitization and online banking have forced banks to cut down on their branch networks. At the same time, banks are looking to strike a balance between increasing digital adoption and maintaining a physical footprint.

U.S. companies that accumulated debt to fortify their balance sheets as the COVID-19 pandemic swept the globe now are burning through their cash reserves in order to pay down debt instead of refinancing at higher costs. Debt ratios are notably lower compared to the pre-pandemic era.

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Written and compiled by Alex Virtucio

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