Feb 3, 2020 - Economy & Business

S&P 500 earnings on pace for 4th straight negative quarter

Traders at the New York Stock Exchange on Jan. 8. Photo: Wang Ying/Xinhua via Getty) (Xinhua/Wang Ying via Getty Images

Strong earnings reports from buzzy tech companies like Amazon and Microsoft have dominated headlines, but the numbers for the broader market remain negative.

What's happening: With 45% of S&P 500 having reported earnings, FactSet estimates an overall earnings decline of 0.3% for the quarter.

  • That's smaller than the 1.8% decline its analysis showed during the previous week.

By the numbers: The percentage of companies that have reported actual EPS above estimates is 69%, below the five-year average.

  • In aggregate, companies are reporting earnings that are 4.1% above the estimates, which is also below the five-year average.
  • 65% of companies have reported actual sales above estimates, which is higher than the five-year average.

Between the lines: IT and consumer discretionary companies have delivered the greatest positive earnings surprises, offsetting weakness in the industrials sector.

Go deeper: UBS issues a warning on earnings

Go deeper

Earnings on pace for a strong rebound

Data: FactSet; Chart: Axios Visuals

Thanks to a cadre of better-than-expected earnings results from the companies that have reported their fourth-quarter earnings so far, the earnings growth rate for the S&P 500 has risen to 0.7%.

Why it matters: That is a far cry from the estimated earnings decline of -1.7% at the end of the quarter. If it holds, this would mark the first time the index has reported year-over-year growth in earnings since Q4 2018. 

S&P 500 earnings continue to improve

With more than half of the companies on the S&P 500 having reported earnings, the consensus estimate for fourth-quarter earnings is down just 0.1% from three weeks ago. That's well above the 1.3% average decline for the past five years, excluding 2018, which was boosted significantly by the Tax Cuts and Jobs Act.

By the numbers: So far, 22% of S&P companies have revised first-quarter profit targets higher, the highest percentage since Q2 2018 and third-highest since 2012, Bloomberg data show.

Coronavirus hits China's tech manufacturing production across the board

Photo: Feature China/Barcroft Media via Getty Images

The novel coronavirus outbreak in China is affecting nearly every sector of tech manufacturing, leading analysts to reduce production estimates for everything from TVs and smartphones to laptops and video game consoles.

Why it matters: Apple's earnings warning on Monday was a wake-up call for investors, but the virus' impact will be felt farther and wider.