© Reuters. FILE PHOTO: A street sign, Wall Street, is seen outside New York Stock Exchange (NYSE) in New York City, New York

By Josephine Mason and Helen Reid

LONDON (Reuters) – The outlook for Wall Street earnings has deteriorated significantly in recent months, data shows, raising the risk that companies in the United States may slip into recession before its economy does – with Europe close behind.

Analysts on average expect the S&P 500’s first-quarter earnings per share to drop 0.3 percent year-on-year, according to I/B/E/S Refinitiv data.

That’s a big drop from the 8.2 percent rise expected as recently as October and would mark the first contraction in U.S. company earnings in three years.

Analysts have also made deep cuts to forecasts for the rest of the year.

They still expect growth in the remaining three quarters, meaning Wall Street would avoid a technical recession typically defined as a fall in two consecutive quarters. But only just, as the lowered growth forecasts are meager.

For a graphic on U.S. earnings estimates over time: https://tmsnrt.rs/2TRqqof

The swift pace and size of the cuts have kindled concerns that the downward trend will continue, particularly as companies struggle with squeezed margins and large amounts of debt.

The full-year estimate stands at just 4.2 percent now, down more than half from 10.2 percent in October.

It’s pretty gloomy on the other side of the Atlantic too. Analysts anticipate barely any growth among European companies listed on the at the slowest in 18 months, data shows.

For a graphic on European earnings estimates over time: https://tmsnrt.rs/2EaTT7f

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link

2019-02-15