Skip to main content

Analysts expect first-quarter earnings for S&P 500 companies to decline 0.1 percent from a year earlier, which would be the first quarterly profit decline for the group since 2016, according to IBES data from Refinitiv.

The latest forecast is down sharply from the start of the year, when analysts estimated growth of 5.3 percent for the quarter.

The earnings picture for this year was expected to be much weaker than that for 2018, when federal tax cuts fueled growth rates above 20 percent for S&P 500 companies for much of the year.

Story continues below advertisement

But estimates have fallen in recent months amid increased worries over lower global growth, particularly in China, and weaker outlooks from top technology names like Apple. Forecasts for energy companies have dropped as well, in a reflection of slumping oil prices.

The gloomy trend in earnings has raised worries about a U.S. profit recession, defined as two straight quarters of year-over-year earnings declines, even as stocks have rebounded sharply this year from a late 2018 selloff. The S&P 500 is up 8 percent so far this year.

Although expectations for 2019’s other three reporting periods have also dropped in recent months, they are still positive. Second-quarter S&P 500 earnings are expected to increase 3.6 percent from a year earlier, while profit growth for all of 2019 is estimated at 4.3 percent, based on Refinitiv data.

Yet negative estimates tend to hurt investor sentiment, even if the actual earnings numbers show profit growth, said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

“If the discussion turns to earnings recession, that’s not going to help stock prices, whether it occurs or not,” he said.

The second quarter of 2016 was the last reporting period in what was a four-quarter profit recession for S&P 500 companies.

Technology and commodity-related sectors have suffered among the biggest drops in forecasts.

Story continues below advertisement

The S&P 500 technology companies, among the biggest contributors to profit growth in recent years, are expected to report a 6.1 percent decline in earnings from a year earlier.

“Companies are really managing expectations to the point where investors are planning for the worst...At some point we will have some catalyst that moves it up, but there’s been this rush to get out the bad news and revise downward,” said Kristina Hooper, chief global market strategist at Invesco in New York.

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter