| NEW YORK, April 24
NEW YORK, April 24 Corporate America is letting
the sun shine in on second-quarter profit outlooks, raising hope
that the first quarter's storms are past.
Second-quarter outlooks for S&P 500 companies so far are
much more optimistic than the last two quarters. Fewer companies
are cutting estimates and those that are reducing forecasts
haven't done so as aggressively as in the past.
As a result, the market has rebounded from its recent
selloff. The Standard & Poor's 500 Index has climbed 3.5
percent in the last eight trading sessions, leaving it less than
1 percent from its all-time closing high.
"The downward revisions for the second quarter right now are
very, very mild," said Nick Raich, chief executive officer of
The Earnings Scout, an independent research firm specializing in
earnings trends, in Cleveland.
"That's the positive for this earnings season."
Negative outlooks still outnumber positive ones for the
second quarter, but at a ratio of 2.9 to 1, they are well below
the 4.7-to-1 ratio at a similar point in the previous earnings
period and the 7.8-to-1 ratio for the one before that, Thomson
Reuters data showed.
Surprisingly strong results have come from many high-profile
names, including Apple, Caterpillar, Netflix
and United Technologies.
That's offset what Wall Street had expected to be a
lackluster first quarter. Estimates were slashed, heading into
this earnings period as the unusually harsh winter hampered
transportation, kept people out of stores and raised heating
First-quarter earnings are in so far from just about 200 of
the S&P 500 companies.
So far, 69 percent of companies have beaten analysts'
expectations, above the long-term average of 63 percent, Thomson
Reuters data showed. Growth is forecast to come in at 2.9
percent, compared with forecasts for sub-1 percent growth before
"It's not a dismal first quarter," said Bucky Hellwig,
senior vice president of BB&T Wealth Management in Birmingham,
Alabama. But "it's still skewed with the reductions in
Estimates for the second quarter, meanwhile, have barely
moved since April 1 at a time when they'd be expected to drop.
Among the 83 S&P 500 companies that reported results through
last week, Raich said the average drop in earnings estimates was
1.1 percent - the smallest in three years.
Expected growth in second-quarter profit is currently 8.1
percent, compared with 8.4 percent on April 1, Thomson Reuters
data showed. Forecasts have increased for three of the 10 S&P
500 sectors - healthcare, industrials and telecommunications -
since April 1.
Helping to relieve concerns, United Technologies, Coca-Cola
, General Motors and McDonald's all
reported strong results from their China operations. That's
negated one of the market's primary worries that weak demand
from the world's second-largest economy would hit profits.
"It is still a little surprising how strong China remains,
given what you read," United Technologies' Chief Financial
Officer Greg Hayes said in an interview, in reference to the
conglomerate's building systems businesses.
(Reporting by Caroline Valetkevitch; Editing by Jan Paschal)