Tuesday, May 21, 2024

Market Snapshot: Woeful earnings threaten to intensify stock-market bloodbath

The prospect of four straight quarters of earnings declines is staring investors in the face on top of the worst multiweek selloff for stocks in years, and the worst start of the year ever.

For the year, the Dow Jones Industrial Average DJIA, -2.39% and the S&P 500 index SPX, -2.16%  are down at least 8%, and the Nasdaq Composite Index COMP, -2.74%  shed more than 10%.

Read: U.S. stocks post worst 10-day start to a year in history

Stocks also rang up a third week of losses for their largest multiweek percentage drop since the four weeks ended Aug. 19, 2011, according to FactSet data. Over the past three weeks, both the S&P 500 and the Dow industrials have declined 8.9%, and the Nasdaq has fallen 11.1%. For the four weeks ended Aug. 19, 2011, the S&P 500 has fallen 16.5%, the Dow is down 14.7%, and the Nasdaq dropped 18.1%.

Also read: Which markets are closed on Martin Luther King Day?

Those hefty losses come as earnings season ramps up during the holiday-shortened week. Several companies on the S&P 500, along with seven Dow components, report quarterly results. And earnings season isn’t looking promising.

Total earnings for the S&P 500 in the fourth quarter are expected to decline from the previous year, even factoring that Wall Street forecasts’ have been lowered.

And read: Stock-market bloodbath wasn’t the bottom, indicator suggests

Over the past four years, estimates for S&P 500 earnings at the end of a given quarter have been an average three percentage points lower than the actual earnings results, according to John Butters, senior earnings analyst at FactSet.

Earnings were estimated to decline by 4.9% at the end of the fourth quarter, that would translate to a 1.9% decline if the average holds up. Currently, earnings are on pace for 5.7% drop.

Plus, current-quarter earnings estimates have taken a notable downturn in the past week.

First-quarter earnings for the S&P 500 are expected to decline from the year-ago period by 0.6%, compared with estimated growth of 0.9% at the beginning of the quarter, according to FactSet data.

Among Dow components: UnitedHealth Group Inc. UNH, -1.35%  and International Business Machines Corp. IBM, -2.17%  report Tuesday; Goldman Sachs Group Inc. GS, -3.58%  reports Wednesday; Verizon Communications Inc. VZ, -0.98% American Express Co. AXP, -0.60% and Travelers Cos. TRV, -1.76%  report Thursday; and General Electric Co. GE, -1.96%  reports Friday.

Notable earnings reports this week
Report date Company/ticker (FactSet EPS / revenue estimate)
Mon., Jan 18 U.S. markets closed for holiday
Tues., Jan. 19
  • IBM ($4.81 / $22.09 billion)
  • UnitedHealth ($1.25 / $43.28 billion)
  • Netflix Inc. NFLX, -2.82%  (2 cents / $1.83 billion)
  • Bank of America Corp. BAC, -3.54%  (27 cents / $20 billion)
  • Morgan Stanley MS, -4.35%  (33 cents / $7.54 billion)
  • Delta Air Lines Inc. DAL, -1.85%  ($1.19 / $9.61 billion)
Weds., Jan. 20
  • Goldman Sachs ($3.57 / $7.09 billion)
Thurs., Jan. 21
  • Verizon (88 cents / $34.11 billion)
  • American Express ($1.13 / $8.4 billion)
  • Travelers ($2.66 / $5.93 billion)
  • Starbucks Corp. SBUX, -1.66%  (45 cents / $5.4 billion)
  • Union Pacific Corp. UNP, -1.74%  ($1.42 / $5.45 billion)
Fri., Jan. 22
  • General Electric (49 cents / $36 billion)
  • Schlumberger SLB, -2.58%  (63 cents / $7.79 billion)
Author: Red

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