Earnings Watch: The end of the pandemic earnings boom is in sight as holiday forecasts disappoint

by | Nov 6, 2022 | Stock Market

Large corporations’ seemingly ceaseless profit growth during the COVID-19 pandemic appears to be coming to an end this holiday season, as the post-lockdown rebound grates up against rising prices, recession fears and tough year-over-year comparisons. The S&P 500 index
SPX,
+1.36%
is now expected to report a year-over-year earnings decline in the fourth quarter, after forecasts from the current earnings season sent expectations from a 0.2% gain to a 1% decline last week, according to FactSet. Should that forecast hold, along with expectations for growth in the third quarter, it would break an eight-quarter pandemic-era streak of earnings gains.

The change follows a string of disappointing holiday forecasts in the two busiest weeks of earnings season, which has pushed the S&P 500 near completion for the quarter — 85% of companies in the index have now reported third-quarter results. So far, 73 of them have issued fourth-quarter guidance, and 50 of those — 68% — have missed expectations with their holiday guidance, higher than the five- and 10-year historical average, FactSet senior earnings analyst John Butters said in a report on Friday. See also: Inflation should send holiday sales to a record high, even as retailers scale back seasonal hires, industry group reports For the third quarte …

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