As the earnings season unfolds, the SPX’s first-quarter and year-ahead earnings projections are on a downward spiral. Earnings surprises are meager at +6.1%, marking 2023’s weakest performance. With a grim earnings growth of about -2%, the initial expectations of +2% have crumbled. Over 20% of the S&P 500 has reported lackluster results, raising concerns about the growth narrative. The contraction in margins for companies reporting results hints at a potentially challenging landscape for the rest of the quarter and beyond.
$SPX earnings for 1Q and next year continue to drop pic.twitter.com/Wg2GIr5z2C
— Michael J. Kramer (@MichaelMOTTCM) January 26, 2024
Earnings surprises thus far are just +6.1%, the weakest of 2023; earnings growth is about -2 %, and expectations were for +2%. Still, many more companies left to report; next week is the key. $SPX pic.twitter.com/xh74dSVf0q
— Michael J. Kramer (@MichaelMOTTCM) January 26, 2024
Falling Earnings Estimates
The falling margin expectations are also weighing on earnings expectations for the first quarter, which dropped to $55.61 per share from around $57.31 in September, a decline of about 2.8%. But again, this will come back to margins and where they go because if margin estimates for the first quarter continue to decline, it will likely weigh more on earnings estimates as we move forward.