Beware of Big Earnings Declines
We ask you, readers, to name the single most important factor that has supported stock prices through all the turmoil over the last year. We bet more than half of you uttered "earnings" to yourself. Earnings have grown strongly in the last year, something that helped keep prices stable despite big geopolitical worries. However, there pillar of the market may now be crumbling as analysts have just turned the earnings outlook negative for the first time in three years. Analysts now expect first quarter earnings to decline by almost 1% from last year. By contrast, at the end of December, expectations were for a 3.3% gain. Most expect the weakness to come from margins, not top line growth.
FINSUM : Continued strong earnings were supposed to be one of the positives this year. I f earnings sputter out, what is there to hold up the market in the face of so much uncertainty?
- first quarter
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