As profit recession hits, Wall Street hopes it's the bottom
Companies across the S&P 500 are expected to report the biggest drop in earnings since the spring of 2020 when first-quarter results begin rolling out this week
NEW YORK (AP) — Profits are falling for companies, and the only question is how much worse they will get.
Big U.S. companies are lining up to report how much profit they made during the first three months of the year, with the reporting season kicking off in earnest on Thursday and Friday. The widespread expectation is that companies across the S&P 500 will report the biggest drop in earnings since the spring of 2020. That's when the pandemic was demolishing the global economy.
Still-high inflation, a struggling manufacturing industry and signs of slowdown elsewhere in the economy mean analysts expect S&P 500 companies to report a 6.6% drop in earnings per share from a year earlier. Besides being the sharpest drop in nearly three years, it would also mark a second straight quarter of profit decline for the S&P 500, according to FactSet. That's something investors call a “profits recession.”
The good news for companies is that many analysts see this as the bottom. They’re forecasting profit declines will moderate from here, before flipping back to growth later this year.
