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BUSINESS Monday 16 october 2017
A25

Of Mutual Interest:

Here comes earnings season: Brace for a slowdown in growth

the first two quarters of the quarter at roughly $50 per
year. barrel, slightly higher than
The diminished expecta- it was a year earlier. More
tions for this reporting sea- importantly, it’s held rela-
son also offer a potential tively steady since sinking
benefit for the market: from $100 in the summer of
Companies can more eas- 2014 to $26 in early 2016.
ily do better than expect- Analysts expect Exxon Mo-
ed. “We believe that we’re bil to report a 33 percent
set up for a nice move in jump in its third-quarter
the year-end here,” said earnings per share, for ex-
Steve Chiavarone, portfo- ample. But that’s only after
lio manager at Federated its earnings plunged in last
Investors. “We think earn- year’s third quarter by 38
ings will come through and percent. —The rest of the
be strong and move mar- market is more sluggish.
kets.” Analysts are forecasting
Here are some of the trends drops in earnings for raw-
to watch as companies re- material producers, utilities
port their third-quarter re- and companies that sell
sults in coming weeks: luxury items and other non-
— Technology once again essentials to consumers.
should be an area of The biggest drops should
Trader Andrew Silverman works on the floor of the New York Stock Exchange. Earnings growth strength. come from the financial
likely slowed sharply in the summer of 2017 and Wall Street is preparing for an underwhelming
reporting season. In a world where growth sector, particularly insur-
(AP Photo/Richard Drew) has been in short supply, ers. Damage from the
technology has been an summer’s hurricanes in the
By STAN CHOE share from a year earlier, ton may herd enough sup- outlier. Customers keep Atlantic, as well as from
AP Business Writer down from nearly 11 per- port to cut tax rates, which logging on, swiping their earthquakes in Mexico, will
NEW YORK (AP) — Earnings cent in the spring, accord- would mean bigger future screens and hitting the mean big payouts for them.
reporting season is getting ing to S&P Global Market profits. “like” button, which has That’s why Wall Street ex-
underway, and Wall Street Intelligence. Even without any move- helped the technology in- pects XL Group to report a
is getting ready to be un- “In other words, earnings ment on taxes, the global dustry regularly report big- loss of $3.50 per share. Less
derwhelmed. results are solid — but not economy finally seems to ger earnings gains than the than two months ago, the
Profit growth likely slowed impressive,” said Scott be in sync and headed in rest of the market. forecast was for a profit of
sharply in the summer for Wren, senior global equity the right direction. The U.S. Earnings for tech compa- 67 cents per share.q
U.S. companies after hur- strategist at Wells Fargo In- economy has been show- nies in the S&P 500 likely
ricanes and other natural vestment Institute. ing stronger signs of growth, rose 10 percent in the third
disasters caused big dam- A slowdown in corporate as have Europe and devel- quarter from a year earlier,
age. Analysts are forecast- earnings growth is particu- oping economies stretch- according to an analyst
ing weaker earnings for larly worrisome to skeptics ing from Latin America to survey by S&P Global Mar-
several areas of the market of the stock market’s re- Asia. If the global growth ket Intelligence. Of course,
from a year ago, a sharp lentless rise to record after continues, it would give tech stocks have also been
turnaround from earlier this record this year. Over the companies something in rising more quickly than the
year, when earnings were long term, stock prices and short supply in recent years: rest of the market this year
soaring by more than 10 corporate earnings tend to stronger sales. The weaker as a result of their stronger
percent and helping to track each other. But the dollar has also made the growth.
drive the stock market to S&P 500 recently has been value of each euro of sales — Energy companies will
record heights. climbing faster than profits, worth more than a year have the most eye-pop-
Thursday marked the un- which means stocks look ago. ping growth, but that’s be-
official start to earnings more expensive than usual. That’s why earnings growth cause of how weak results
reporting season for many Many analysts see the for S&P 500 companies is were a year ago.
investors, when JPMorgan earnings slowdown as tem- expected to jump back Analysts are forecasting
Chase said its third-quar- porary, though. A big rea- to 11 percent in the last earnings to more than dou-
ter profit rose 7 percent. son for the pause was likely three months of this year, ble for the energy sector,
For the overall Standard & the devastation created according to CFRA. That’s rising 130 percent. That’s
Poor’s 500 index, analysts by the summer’s natural close to the 15.5 percent largely because the price
are forecasting a rise of disasters. Plus, investor opti- and 11 percent growth of oil is no longer plung-
3 percent in earnings per mism is rising that Washing- the index was delivering in ing. Crude ended the third