Wall Street turns gloomier on profit outlook
NEW YORK (Reuters) - Wall Street analysts have turned increasingly pessimistic about U.S. financial results for the fourth quarter and trimmed their profit growth forecasts for the first and second quarter of 2008, according to a weekly survey by Reuters Estimates released on Monday.
The survey, which follows a slew of weak economic data and announcements of financial write-downs, showed analysts expected S&P 500 companies' fourth-quarter earnings to fall 8.4 percent from a year earlier.
That was gloomier than the 6.1 percent decline forecast a week earlier, and the 11.5 percent growth forecast in an October 1 survey.
Analysts forecast first- and second-quarter earnings growth of just 4.7 percent and 4.6 percent, respectively, according to Ashwani Kaul, senior market analyst at Reuters Estimates. That was down from last week's 5.1 percent and 5 percent forecasts, and down from October 1 expectations of 11.4 percent and 9.4 percent.
The financial sector was expected to show the weakest year-over-year performance in the fourth quarter, with earnings expected to fall 62 percent. Earnings in the basic materials sector were forecast to decline 10 percent.
The technology sector, on the over hand, was seen as the strongest, with earnings expected to grow 23 percent.
Last Friday, U.S. shares were hit by data showing a strong rise in unemployment, and the S&P 500 index .SPX tumbled 2.46 percent to 1,411.63. Technology shares led the broad-based decline, while stocks in defensive sectors such as utilities, drug and food showed resilience, suggesting investors were bracing for hard economic times.
(Reporting by Ritsuko Ando; Editing by Quentin Bryar)
