Are Earnings Outlooks Ominous?

According to a report by John Butters at Factset, 73% of S & P 500 companies (NYSEARCA:SPY) exceeded analyst expectations for the third quarter; however, the early numbers show that number going down significantly in the remainder of the year. Of 106 companies who have provided guidance, 78 of them (74%) have predicted fourth quarter results below analyst expectations. That number is up from the first and second quarters when 64% of companies gave negative guidance.

Barron’s reports that an especially high percentage of companies in the consumer-related sector are predicting results below analyst expectations. “Of the five consumer staples companies that issued fourth quarter guidance, all five have missed expectations. Of the 18 consumer discretionary companies, 14 issued guidance below expectations.”

Barron’s also lists the materials, medical, and industrial sectors as segments that are largely forecasting below predicted fourth quarters with a whopping 80% issuing negative guidance. Telecommunications and information technology industries posted the largest percentage of positive guidance.

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