US Q1 earnings could drop to lowest point in three years
Wall Street lowers its estimates for Q1 corporate earnings.
The US earnings season has been off to a rocky start. Wall Street is lowering its estimates for first quarter(Q1) corporate earnings to its lowest level since Q2 2016.
Why is Wall Street lowering its expectations for Q1 earnings?
For Q1 earnings, Wall Street is projecting a 0.8% drop, much less than the predicted 3.3% growth. Financial experts diminished their forecasts after a host a of factors affected earnings.
The current crop of modest earnings reports and weak guidance from corporations like Apple and Amazon have led to a decrease in Wall Street expectations.
Max Gokhman, head of asset allocation at Pacific Life Fund Advisors, noted that the pressure on corporations’ margins caused a lessening in earnings estimates. He believes that the US-China trade war and an surge in labour costs are reducing earnings estimates.
‘Margin deterioration is going to be a big theme this year. What is driving that deterioration is higher labour costs and the friction created by the trade war, which disrupts supply chains’, said Gokhman.
What’s next for US earnings?
US earnings season has been mixed so far, but many financial experts like, Ed Keon, portfolio manager and chief investment at QMA, wants to exercise patience on companies' earnings.
‘We're not making big bets for or against stocks and bonds. We're trying to see if this is a garden variety slowdown or if it's the beginning of something worse. I don't think any of us knows the answer to that now,’ said Keon.
Nicholas Colas, co-founder of DataTrek, is optimistic that the market will rise on the strength of a dovish Fed and that future reports from companies like Google will bring better news for the US markets.
‘The market is trading on the hope that this is a temporary issue and that we start to see some growth in the second quarter and that the back half of the year should be a whole lot better,'said Colas.
The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.
Act on share opportunities today
Go long or short on thousands of international stocks with CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
