Wall Street revises Q3 forecast with lower corporate profit

The largest publicly traded companies in the United States delivered the lowest rate of earnings growth in the second quarter since the fourth quarter of 2020, when the world was shaken by Covid-19.

In the background, a scenario of rising interest rates to control the highest inflation in more than four decades in the country is already having an impact on business and makes Wall Street revise downward projections for future profits, under the fear of a recession in sight. — even if the American job market signals otherwise.

In addition, the strong dollar also acted as a headwind for US multinationals.

In recent weeks, the number of companies that have surpassed market projections in the US has even grown, especially in the energy and health sectors.

So far, 87% of companies in the S&P 500 (which brings together the biggest publicly traded names in the country) have already released their second-quarter numbers, according to financial analysis firm FacSet.

Of these, 75% delivered earnings per share (EPS) higher than market projections. However, the majority (or 77%) had a result below the average of the last five years.

As a result, the S&P 500 has so far delivered its lowest profit since the fourth quarter of 2020, when companies felt the effects of lockdowns on economies to contain the spread of Covid-19.

Of the 11 sectors in the index, six reported growth in earnings, especially energy, industry and materials.

On the other hand, five segments delivered declining results, including companies in the financial, consumer and telecommunications segments.

“Consumers (in the US) are making choices and being very rational about spending. When we look at the unfolding of consumer spending, where there was a bigger inflationary shock, we see a reduction in the balance between real spending and quantity of products,” noted Mastercard Economics Institute chief economist for the US, Michelle Meyer, in an interview with the Estadão/Broadcast.

The consolidated numbers for the second quarter left Wall Street analysts more skeptical about the coming months.

“While the second quarter earnings season allowed for another round of modest gains, analysts are lowering their estimates for the second half of this year and for the year 2023,” said Jefferies strategists Kenneth Chan and Sean Darby.

The information is from the newspaper. The State of São Paulo.