U.S. companies are more negative in their earnings outlooks than they have been in 11 years, due to mounting worries about Europe and slower overseas demand.
With pre-announcements in so far from 54 Standard & Poor's 500 companies, the negative-to-positive ratio for the third quarter stands at 5 to 1, the most negative since the second quarter of 2001, according to Thomson Reuters data.
That's a big increase from the second quarter's ratio of 3.3 to 1, which included guidance from 143 S&P 500 companies.
"With all of the uncertainty around the global economy, Europe being at the top of the page, China being in the middle of the page and then the U.S. slowdown, it is completely understandable companies are issuing cautious remarks about future earnings," said Leo Grohowski, who oversees more than $170 billion in client assets as chief investment officer at BNY Mellon Wealth Management in New York.
The third-quarter pre-announcement ratio is the latest bit of data to point to a deteriorating picture for U.S. earnings.
While the majority of companies who have reported results so far for the second quarter have beaten earnings expectations, just 40 percent have beaten revenue estimates, the lowest amount since the first quarter of 2009, Thomson Reuters data shows.
The technology sector has led in negative earnings guidance.
"Eighteen of the (40) negative ones were in tech, so almost half" came from that sector, said Greg Harrison, corporate earnings research analyst for Thomson Reuters. "But tech usually gives more guidance than other sectors."
Among the most notable was Apple's negative guidance for the third quarter. Apple also surprised investors by missing analysts' estimates on earnings and revenue on second-quarter results.
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