Fewer Firms Offering Earnings Guidance in Ominous Sign

Wednesday, 11 Apr 2012 08:08 AM

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Fewer S&P 500 companies are offering earnings guidance, or predictions on what they will take in and earn, which has Wall Street analysts worried.

Stock markets often punish companies that miss guidance, and with fewer firms making forecasts, some are worried a recent spate of strong corporate earnings may be coming to an end or at best cooling off.

In March, only 27 companies making up the Standard & Poor’s 500-stock index provided earnings guidance to investors, the lowest ever for March and just the second-lowest of any month since 2000, Smart Money reports, citing a Bank of America-Merrill Lynch Global Research report.

Editor's Note: Obama’s Economic ‘Fix’ is In . . .

That has analysts bracing for disappointing numbers to hit the wire.

"The waters could get choppier for equity markets as earnings season gets underway," says John Lonski, chief economist for Moody’s Analytics, Smart Money adds.

Some aren't so worried.

"Are we going to see 5-10 percent growth in earnings by almost all of the S&P 500? Probably," investor and strategist Dennis Gartman, author of The Gartman Letter, tells CNBC.

Current calls of up to 2 percent growth in numbers are "probably a bit on the downside," Gartman adds.

S&P 500 company earnings rose by 19 percent in the first quarter of 2011, although Gartman says a repeat performance will be difficult this year.

Still, the economy will rebound and even though the country added 120,000 jobs in March, way below expectations, investors should wait and see if April and May indicators disappoint before adjusting strategies.

"We are adding jobs, a smaller number than hoped. When the next numbers come out, hopefully we will see this month’s revised upwards," Gartman says.

Editor's Note: Obama’s Economic ‘Fix’ is In . . .

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