Corporate Profit Crunch Looms as Stocks Slide

A danger is lurking as the stock market dives: Earnings expectations are falling, too.

In December, analysts cut their earnings forecasts for 2019 on more than half the companies in the S&P 500, according to FactSet, the first time that had happened in two years.

For now, analysts still expect profits to keep growing in the coming year, but at a slower pace. They expect earnings for S&P 500 companies to grow 7.8% in 2019, down from their forecast of 10.1% at the end of September, according to FactSet.

That is a big climb down from the estimated 22% earnings growth rate in 2018, when corporate results were boosted by tax changes and a strong economy.

Investors are worried the moneymaking outlook for companies will deteriorate further. Equity strategists at Morgan Stanley now see a more than 50% chance of an earnings recession in 2019, defined as two consecutive quarters of earnings declines compared with the year before.

https://www.msn.com/en-us/money/markets/corporate-profit-crunch-looms-as-stocks-slide/ar-BBRDS4p?li=BBnbfcN