The third quarter's earnings season is just kicking off, but already analysts have low expectations, dragging stocks down in all but one sector.
The third quarter’s earnings season is off to a poor start just days after the International Monetary Fund downgraded global economic growth.
Reuters reported that analysts are expecting quarterly earnings for S&P 500 companies to decline 2.3% from this time last year. The market has been strong all year, so it remains to be seen if it can push through this earnings season.
Worries were high about this earnings season and the market took a hit on Tuesday, particularly in technology with even Apple ending down for the day. Microsoft lost 1.7%. Negative reports on Intel by two brokerages triggered the selloff.
It wasn’t just the tech sector where there were poor expectations for this earnings season. In the health care sector, Edwards Lifesciences took a big hit with its stock price down 21% by the end of the day on news that Q3 sales are going to be lower than the company’s forecast. The company doesn’t release its full quarter earnings report until Oct. 19.
The medical device maker reported $448 million in preliminary sales for the quarter, which was well below the $465 million to $485 million the company forecasted in July. The company took the biggest hit on lower-than-expected sales of transcatheter heart valves because of government cutbacks in Europe and limited insurance reimbursements in the U.S., according to Chief Executive Officer Michael Mussallem.
Analysts had expected $476.5 million in quarterly sales, according to the average 19 estimates compiled by Bloomberg;
Alcoa, which always kicks off earnings season, posted earnings and sales that exceeded analysts’ estimates, but showed a net loss of $143 million. A year earlier the company reported net income of $172 million.
Alcoa, had a rocky day, but closed up 0.11% and after the markets closed the stock was up further by 0.66% to $9.19.