Brace for worst earnings since recession rebound

The J.P. Morgan Chase Tower in Houston, Texas, USA, from near its base. (Photo credit: Wikipedia)

San Francisco, Oct.7, stock advice .-  This earnings season threatens to be one of the roughest since U.S. companies started to pull themselves out of the Great Recession — even if, as usual, results don’t live up to the worst of the gloom-and-doom forecasts.
Revenue streams are drying up as China’s growth slows and Europe reels from crisis to crisis. Companies are finding fewer places to cut costs. It’s looking so bad, in fact, that results won’t have to be that great to inject a burst of optimism into the market. Quarterly earnings season kicks off next week with reports from Alcoa Inc. (US:AA) and J.P. Morgan Chase & Co. (US:JPM)

On the whole, profits for the S&P 500 (US:SPX) in the three months ended in September are forecast to drop 2.6% from the year-ago quarter, according to a FactSet analyst survey. If results match expectations, the quarter will break a streak of 11 straight quarterly gains that reaches back to late 2009, as Corporate America was clawing its way out of a financial crisis and severe recession that ended in June of that year.
Wall Street is likely responding to downbeat cues from companies, who have collectively given one of the most negative earnings outlooks in several years.



Eighty out of the 103 S&P 500 companies that have given earnings guidance, or 78%, have issued a third-quarter forecast that falls below the Wall Street consensus estimate. That’s the highest negative-outlook rate since FactSet started tracking the data in 2006.Yet history suggests the quarter will not end up nearly as bleak as these projections. ... Continue to read.

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