Earnings Watch: As Wall Street pushed stocks higher to start 2023, earnings expectations sank by almost the same amount

by | Apr 2, 2023 | Stock Market

As the S&P 500 index eked out gains in the first quarter, analysts and dozens of companies grew more pessimistic about their earnings by almost the same percentage, as higher prices and fissures in the banking system sharpened fears of a downturn. As the weather front of first-quarter earnings reports approaches, Wall Street analysts expect first-quarter per-share profit for companies in the S&P 500
to fall 6.6%, according to a report from FactSet released on Friday. That would be the biggest drop since the second quarter of 2020, when the pandemic’s toll on the economy was at its worst and sent earnings 31.8% lower.

Analysts have also cut their first-quarter estimates on the bottom line at a steeper rate than average. From Dec. 31 to March 30, analysts lowered their earnings-per-share estimates by 6.3%. Analysts typically temper those forecasts over a given quarter as financial realities emerge, but in the past five years, that average decline during a quarter has been only 2.8%, FactSet said. “Given the continuing concerns in the market about bank liquidity and a possible broader economic recession, did analysts lower EPS estimates more than normal for S&P 500 companies for the first quarter? The answer is yes,” FactSet Senior Earnings Analyst John Butters wrote Friday. For more: An earnings recession seems inevitable, but it might not last long And while investors managed to push the S&P 500 index 6.7% higher through the first quarter, more execu …

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