NEW YORK (Reuters) – Analysts count on first-quarter earnings for S&P 500 firms to say no 0.1 % from a 12 months earlier, which might be the primary quarterly revenue decline for the group since 2016, based on IBES knowledge from Refinitiv.
FILE PHOTO – A specialist dealer works on the ground of the New York Inventory Change, August 21, 2015. REUTERS/Brendan McDermid
The most recent forecast is down sharply from the beginning of the 12 months, when analysts estimated development of 5.three % for the quarter.
The earnings image for this 12 months was already a lot weaker than in 2018, when federal tax cuts fueled development charges above 20 % for S&P 500 firms for a lot of the 12 months.
Nonetheless, estimates have fallen in latest months amid elevated worries over decrease world development, significantly in China, and weaker outlooks from high know-how names like Apple. Forecasts for power firms have dropped as properly, in a mirrored image of slumping oil costs.
The gloomy pattern in earnings has raised worries a few U.S. earnings recession, outlined as two straight quarters of year-over-year earnings declines, at the same time as shares have rebounded sharply this 12 months from a late 2018 selloff. The S&P 500 is up 7.7 % thus far this 12 months.
Damaging estimates have a tendency to harm investor sentiment, even when the precise earnings numbers present revenue development, mentioned Bucky Hellwig, senior vice chairman at BB&T Wealth Administration in Birmingham, Alabama.
“If the dialogue turns to earnings recession, that’s not going to assist inventory costs, whether or not it happens or not,” he mentioned.
The second quarter of 2016 was the final in a four-quarter revenue recession for S&P 500 firms.
Know-how and commodity-related sectors have suffered among the many greatest drops in forecasts.
The S&P 500 know-how firms, among the many greatest contributors to revenue development in recent times, are anticipated to report a 6.1 % decline in earnings from a 12 months earlier.
For all of 2019, S&P 500 revenue development is now anticipated to be simply 4.three %, in contrast with estimated revenue development of 24 % for 2018, primarily based on Refinitiv knowledge.
“Corporations are actually managing expectations to the purpose the place buyers are planning for the worst … In some unspecified time in the future we may have some catalyst that strikes it up, however there’s been this rush to get out the dangerous information and revise downward,” mentioned Kristina Hooper, chief world market strategist at Invesco in New York.
Reporting by Caroline Valetkevitch; Enhancing by Steve Orlofsky and Susan Thomas