Earnings Watch: Wall Street is raising quarterly profit forecasts for the first time in two years, and executives are relaxing about recession prospects

by | Sep 3, 2023 | Stock Market

After nearly two years of concerns about a recession, growing optimism about the economy is starting to filter down into Wall Street’s expectations for individual companies’ quarterly results, with analysts growing more upbeat about corporate profit in the months ahead While expectations for those quarterly results usually trend lower as earnings season arrives, analysts over the past two months have actually nudged their profit forecasts higher for the first time in two years, according to a FactSet report released Friday.

Holdouts against that optimism aren’t hard to find, but during July and August, Wall Street analysts increased their third-quarter earnings per share estimates for the 500 companies in the S&P 500 Index
the report said. “In fact, this quarter marked the first increase in the bottom-up EPS estimate over the first two months of a quarter since Q3 2021,” FactSet Senior Earnings Analyst John Butters said in the report. Estimates for third-quarter earnings per share rose by 0.4% from June 30 to Aug. 31, he said. Fourth-quarter estimates also increased by 0.6% over that period. Those estimates for companies tend to fall as their earnings dates approach, as optimistic projections fade and financial realities set in, but the Federal Reserve recently said it now expects a “noticeable slowdown” rather than a recession. And some analysts said that the August jobs report was precisely w …

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