The first earnings recession for the S&P 500 since 2016 is taking shape
By Tomi Kilgore
Published: July 31, 2019 7:21 a.m. ET
Earnings season is now more than half over and Q2 growth is still negative
Earnings reporting season is more than half over, and hopes for an improvement to growth are fading fast.
While there has been some improvement in the past two weeks, the S&P 500’s first earnings recession in three years may now be just around the corner.
Through Tuesday evening, 298 of the 505 S&P 500 companies SPX, -0.26%, or 59%, had reported second-quarter results. The aggregate blended earnings-per-share estimate, which includes both actual and estimated results, was for a decline of 1.86%, according to FactSet data, compared with an estimate of a 3.0% decline just before earnings reporting season started.
Of the 11 S&P 500 sectors, six are showing EPS declines, led by the 18.9% drop for the materials sector, followed by the 11.3% fall in industrials’ earnings, FactSet said. The health-care sector was so far the best performer with growth of 7.2%, followed by financials at 5.0%.
See related: Banks should shine among S&P 500 stocks this earnings season.
An earnings recession is generally defined as two straight quarters of year-over-year EPS declines. If the second-quarter EPS growth ends up being negative, after a 0.3% decline in the first quarter, it would mark the first back-to-back quarters of declines since the second quarter of 2016.
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