Wall Street analysts don’t expect S&P 500 companies to blast the door with their fourth-quarter earnings reports when they begin to trickle out in January.
On the contrary, slow economic growth, rising interest rates and stubborn inflation have made strategists cautious about the stock market in 2023.
S&P 500 earnings fell 2.8% in the fourth quarter, according to new data from FactSet. If correct, this would be the first earnings decline reported by the S&P 500 since the third quarter of 2020, when earnings fell 5.7%.
Expectations for corporate earnings are already lower, data from FactSet shows. Earnings per share estimates for the fourth quarter are down 6.1% since Sept. 30.
“Slowdown in nominal activity means less sales growth and downward pressure on margins,” Dennis DeBusschere, founder of 22V Research, wrote in a note to a client. “At the same time, management sentiment towards future earnings, as measured by the Amenity natural language processing tool, has turned deeply negative. The long-anticipated decline in earnings has arrived.”
Despite a long list of reasons – chief among them the aforementioned earnings weakness – to be cautious about equities in the upcoming earnings season, analysts remain bullish on their assessments.
There are 10,835 ratings on stocks in the S&P 500, says FactSet. Of these 10,835 reviews, 55.3% are buy ratings, 38.8% hold ratings, and 5.9% are sell ratings.
But a few stocks in the S&P 500 that do have sell ratings suggest that analysts really don’t care about these stories.
Companies such as Principal Financial Group, T. Rowe Price Group, and ConEd have more than 50% of analysts rating the stock as Sell.
So as investors try to recover from a challenging year in the markets, these are a few of the names Wall Street is least confident will help turn things around for your portfolio.
Brian Sozzi is editor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and further LinkedIn.
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