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Traders on the New York Stock Exchange
Traders on the New York Stock Exchange
(BRENDAN MCDERMID/REUTERS)

Earnings: When expectations meet reality, things can get ugly

Expectations are everything. Lower them enough, and you’re bound to please people when you exceed them.

This idea certainly applies to corporate earnings: Expectations for first-quarter results have come down to the point where analysts see no profit growth for companies in the S&P 500, year-over-year. That’s down sharply from growth of 8.5 per cent in the previous quarter and offers a potential obstacle to the bull market.