TD Cowen sees 60% chance SEC will shift to semi-annual reporting

Investing.com - TD Cowen analysts believe there is a 60% probability that the Securities and Exchange Commission will switch from quarterly to semi-annual reporting requirements for public companies. The potential change comes as the S&P 500, tracked by SPY, trades near its 52-week high with a P/E ratio of 14.65, suggesting strong market conditions for such regulatory shifts.

The firm's analysis follows recent developments, including a Wall Street Journal report that the Long-Term Stock Exchange has been meeting with the SEC about changing reporting frequency and plans to formally petition the agency. President Trump's renewed interest in the topic after these reports is viewed as significant by TD Cowen. With the broader market showing resilience, evidenced by SPY's 12.84% year-to-date return, the timing for such regulatory changes appears favorable. InvestingPro subscribers can access over 30 additional market health indicators and exclusive analysis to better understand potential regulatory impacts on their investments.

TD Cowen notes that while companies and markets have debated the value of quarterly earnings reports for decades without regulatory change, the current situation differs because there appears to be political backing for SEC Chair Paul Atkins to make this a policy priority. The firm considers this an "easy policy win" that aligns with Atkins' deregulatory focus.

The analysts estimate it will take SEC staff at least six months to craft a proposal and collect economic data necessary for the rule change to withstand judicial review. They suggest monitoring whether Atkins discusses the issue in upcoming public speeches and if it appears on the agenda for the SEC's Investor Advisory Committee.

TD Cowen indicates their 60% probability assessment has an upward bias, stating that "the prospects for action are more likely to rise than to fall" given the alignment between the SEC chair's regulatory philosophy and the president's stated preferences.

In other recent news, Bank of America has adjusted its forecast for the Federal Reserve, predicting two 25-basis-point interest rate cuts in 2025 due to weak labor market data. The decision follows an August jobs report that showed minimal job growth and a rise in the unemployment rate to 4.3%. Meanwhile, Goldman Sachs has revised its third-quarter GDP growth forecast downward to 1.6%, citing a widening trade deficit driven by increased imports from China and gold. The firm also notes that policy news and Federal Reserve speeches are expected to be significant market catalysts this week.

Additionally, Raymond James highlights that small cap value stocks are the only investment style currently trading below their long-term price-to-earnings average. The firm described the recent earnings period as historically strong, with eight out of 11 market sectors experiencing positive earnings revisions. In contrast, health care, energy, and materials sectors showed negative trends. Lastly, Boston Federal Reserve President Susan Collins advocates for a patient approach to interest rate adjustments amid economic uncertainty, emphasizing the importance of carefully assessing incoming data.

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