Earnings Watch: Wall Street grows pessimistic about holiday season, but record profit still expected

by | Dec 5, 2022 | Stock Market

With less than one month left in the fourth quarter, Wall Street is getting more pessimistic on company earnings for the all-important holiday season, and now expects earnings to recede year-over-year for the first time since early in the COVID-19 pandemic. But despite that downturn in expectations, analysts still expect record profit this year and an increase to another record next year, even as consumers battle inflation and recession concerns endure.

Wall Street analysts have lowered their expectations for fourth-quarter earnings by more than 5% so far this quarter, as roughly two-third of S&P 500
companies have issued disappointing forecasts, FactSet senior earnings analyst John Butters said in a report on Friday. During October and November, analysts lowered their fourth-quarter earnings-per-share forecasts by 5.6%. While analysts typically trim their estimates as a quarter progresses, those reductions usually aren’t as steep. Over the past 20 years, those estimates have typically come down 2.9% on average during the first two months of a quarter, Butters said in the report. Wall Street expects a 2.4% decrease in fourth-quarter earnings for S&P 500 companies, but gains of 5.2% for the year overall, Butters said. But analysts are currently more upbeat on 2023, with expectations for 5.6% growth, as businesses get by on sturdy consumer demand and price increases. In-depth: Corporate profit is at a level well beyond what we have ever seen, and it’s expected to keep growing Butters said in an email that …

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