Wall Street banks have slashed their expectations for third-quarter earnings of big US companies by $34bn over the past three months, with analysts now anticipating the most feeble rise in profits since the depths of the Covid crisis.
Analysts are expecting companies listed on the S&P 500 index to post earnings-per-share growth of 2.6 per cent in the July to September quarter, compared with the same period a year earlier, according to FactSet data. That figure has fallen from 9.8 per cent at the start of July, and if accurate would mark the weakest quarter since the July to September period in 2020, when the economy was still reeling from coronavirus lockdowns.
The darkening outlook highlights how worries over Federal Reserve rate increases and early signs of deterioration in the US economy have left investors more cautious on the prospects of listed companies. Wall Street’s S&P 500 has already fallen by about a fifth this year as fund managers adjust to this reality, but many analysts fear that current profit expectations are still overly optimistic.