Tags: Outlook | Corporate | Profits | Earnings

FT: Outlook for US Corporate Profits Dims

FT: Outlook for US Corporate Profits Dims
(Dollar Photo Club)

By    |   Tuesday, 21 March 2017 08:45 AM

Analysts recently have been scaling back their corporate-profit forecasts in what some experts view as an omen to the end of the stock-market bull run.

The U.S. stock market has been on record-setting spree since the election of Donald Trump as president, but the rally has faltered in recent weeks as investors fret over the lack of clarity on his proposals to reform taxes and cut regulation, Reuters has reported.

For the year, the S&P 500 is up 134.64 points, or 6 percent, the AP reported. The Dow Jones industrial average is up 1,143.26 points, or 5.8 percent. The Nasdaq is up 518.41 points, or 9.6 percent.

FactSet predict that earnings for companies listed on the S&P 500 index will jump 9 percent in the first quarter.

“While the rate marks a significant uptick from the 4.9 percent 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 Financial Times reported.

“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,” the FT reported.

Nicholas Colas, chief market strategist at Convergex, told the FT 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. That is invisible in the numbers,” he said.

Analysts have also said the Trump administration is spending too much of its political capital to pass a Republican-proposed healthcare bill, which may leave it wanting for support when it tries to reform the tax code, Reuters reported.

"With tax reform and infrastructure spending getting pushed to the end of this year or even next year, it will eventually weigh on sentiment and business confidence," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

"Eventually, the market will lose patience," Frederick said.

(Newsmax wires services contributed to this report).

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Analysts recently have been scaling back their corporate-profit forecasts in what some experts view as an omen to the end of the stock-market bull run.
Outlook, Corporate, Profits, Earnings
366
2017-45-21
Tuesday, 21 March 2017 08:45 AM
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