The US corporate profit outlook has dimmed in recent weeks, with analysts paring back their forecasts, in a fresh sign of the risks facing the Wall Street rally that has powered equities to record peaks. Earnings for companies listed on the S&P 500 index, the main US stock barometer, are predicted to rise 9 per cent in the first quarter, FactSet data show. While the rate marks a significant uptick from the 4.9 per cent notched in the final three months of 2016, it represents a reduction from the 12.3 per cent expected at the start of this year. The weaker estimates come at a time when stocks are trading near record highs. The S&P 500 has rallied by 6.2 per cent year-to-date as of Friday’s close — and the benchmark sits less than 1 per cent from the all-time peak it hit on March 1. Equities look more expensive as a result. A closely watched valuation measure developed by Yale economist Robert Shiller, the cyclically adjusted price-to-earnings ratio, struck its highest point in 15 years this month. Nicholas Colas, chief market strategist at Convergex, noted that it was a “normal pattern” for analysts to “start high with [earnings] estimates and move lower”, but he said this time should have been different given President Donald Trump’s slate of business-friendly initiatives. “You wouldn’t know that there was an agenda in place to lower corporate taxes and raise infrastructure spending.
Submitted March 19, 2017 at 09:43PM by singaporeslin9 http://ift.tt/2mYzDeR
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