Economic Pain Takes Toll on U.S. Earnings Forecasts

English: 3 Times Square, as seen from 43rd and Broadway (Photo credit: Wikipedia)

NEW YORK (Reuters) – Expectations for U.S. corporate earnings are deflating fast as the euro zone crisis deepens and economic data around the world disappoints. Standard & Poor's 500 earnings for the second quarter are  now forecast to grow 7.4 percent, down from an early January forecast of 10.1 percent, according to Thomson Reuters data.

But remove profits-generating machine Apple Inc and the financial sector , which has weak year-ago comparisons, from the numbers and the forecast looks much worse. After those exclusions, the rest of the index is expected to report a 0.9 percent drop in second-quarter profits.

Most S&P 500 sectors have seen estimates fall since January, with energy, materials and utilities all expected to see profit declines from a year ago, while telecommunications and healthcare profits are barely rising.

“Those responsible for giving guidance, they have to be worried about the economy right now, the worldwide economy,” said Kenneth Naehu, a managing director at Bel Air Investment Advisors in Los Angeles, which manages about $6.5 billion. “Fear is embedded in the marketplace.”...Continue to read.

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