MarketWatch
19 Sep 2019, 14:53 GMT+10
The S&P 500 is officially in an earnings recession for the first time in three years, and the trend is expected to get worse in the third quarter.
The entirety of the S&P 500 index SPX, +0.03% has reported results for the second quarter, showing an average earnings drop of 0.35%. Components posted a 0.29% decline in earnings per share in the first quarter, marking the first period of back-to-back declines since the second quarter of 2016. Earnings recessions are typically categorized as two straight quarters of falling earnings.
Analysts surveyed by FactSet currently project a steeper drop for the third quarter, with estimates calling for a 3.95% decline on average. Sentiment has worsened since the start of the year, as analysts had been projecting a 1.07% increase in third-quarter earnings as of late March. But they expect things to turn positive again in the holiday period, with expectations for 1.3% growth overall in the calendar year.
Some of the worst-performing companies for the second quarter were in metals and mining, with earnings for that subsector down 76% on average amid falling prices and rising costs for companies like Freeport-McMoRan Inc. FCX, -0.48% . The materials sector overall saw a 17.88% decline, led by weakness in mining that's projected to persist for another quarter.
Industrials were another negative area, though most of the sector's 10.23% decline could be blamed on Boeing Co. BA, +0.58% , which swung to a big loss after its 737 Max jets were grounded. Building products and construction companies were other big contributors to the sector's decline.
Software and IT services were among the bright spots in the tech sector, but storage and semiconductors helped drive a 5.98% average earnings drop for information-technology companies. Chip companies had been calling for a second-half rebound heading into the latest round of earnings, but now some executives are a bit less confident. And looking ahead to the third quarter, analysts model a 30.81% drop in chip-sector earnings, steeper than the 25.38% drop experienced in the latest period.
In all, five of the 11 S&P sectors saw earnings rise, led by health care and, particularly, insurers. Cigna Corp. CI, -0.66% witnessed a 72.42% rise in earnings, while Humana Inc. HUM, -0.24% grew profits by 49.84%.
The other sectors to show profit growth were communication services, financials, real estate and utilities. Analysts expect the same five sectors that grew earnings in the second quarter to repeat that performance in the third quarter.
The S&P 500 has ticked up 3.1% in the past three months.
Source: MarketWatch
Get a daily dose of Santa Barbara Post news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Santa Barbara Post.
More InformationA U.S. businessman, a giant in the pharmaceutical industry, is to be jailed for eighteen years and will have to ...
WASHINGTON, DC - Outgoing U.S. President Donald Trump's administration carried out its last federal execution when Dustin John Higgs, convicted ...
WASHINGTON, DC - U.S. President-elect Joe Biden on Thursday (local time) announced a USD 1.9 trillion plan to revive the ...
This is the first time in his life as a big-time basketball player that Jerami Grant is the No. 1 ...
The New Orleans Saints are unlikely to have backup running back Latavius Murray or multifaceted offensive weapon Taysom Hill when ...
Kabul [Afghanistan], January 17 (ANI/Sputnik): US and Afghan officials on Sunday condemned the killing of two female supreme court judges ...
WASHINGTON, DC - Outgoing U.S. President Donald Trump's administration carried out its last federal execution when Dustin John Higgs, convicted ...
A Chinese government survey ship was intercepted "running dark" without broadcasting its position via AIS (Automated Identification System) by Indonesian ...
WASHINGTON, DC The man who struck down three U.S. Capitol Police officers with a fire extinguisher during last week's storming ...
WASHINGTON, DC - A Utah man has been charged with breaking into the U.S. Capitol last week wearing a bullet-proof ...
Provided by Xinhua | &A 6.2-magnitude earthquake has killed 35 people in Indonesia, injuring 637 and displacing around 15,000 people.JAKARTA, ...
Five United Nations peacekeepers lost their lives on Wednesday, 4 in Mali and one in the Central African Republic. 4 ...