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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (45367)	12/19/2001 2:47:35 PM
From: Sully-	Read Replies (1) \| Respond to of 65232

Corporate earnings set for another brutal quarter By Denise Duclaux NEW YORK, Dec 19 (Reuters) - The stock market has taken flight since late September, but corporate earnings may suffer their worst earnings drop of the year in the fourth quarter. Investors are pinning their hopes on an economic -- and profit -- recovery by the middle of next year, but they will have to weather harsh numbers in the meantime. The Standard & Poor's 500 index (^SPX - news) has rallied more than 19 percent since Sept. 21 -- 10 days after the attacks on the United States -- but companies in the broad market index are still showing their worst earnings performance in a decade. The S&P 500 companies posted a 21.6 tumble in profits for the third quarter, marking the biggest fall in earnings since the last recession of 1991, according to Thomson Financial/First Call. Analysts are forecasting a 20.1 percent drop in earnings in the fourth quarter, but the research firm believes that number could widen to 22 percent. ``People have written off the fourth quarter and probably the first quarter to some extent,'' said Chuck Hill, director of research at First Call. ``They are looking for a recovery in the second or third quarter of next year, but I don't think that's necessarily a given.'' Corporate earnings dropped four straight quarters in 1991, but they threaten to fall five straight quarters in the latest recession. Analysts are forecasting a 5 percent fall in the first quarter, and those estimates could widen to a 15 percent to 16 percent fall as the quarter progresses, according to First Call. ``You can make the case -- if you combine both length and depth -- this is certainly one of the worst earnings recessions, if not the worst,'' Hill said. The trend should reverse in the second quarter of 2002. Earnings are expected to show a 10.3 percent gain vs. a year ago, First Call said. Hill predicts actual numbers could range ``somewhere from down a few percentage points, to up a few percentage points.'' Analysts expect companies in the S&P 500 to post a hefty 30.6 percent rise in profits in the third quarter of 2002 and a roughly 34 percent jump in the fourth quarter, but those bullish forecasts will likely drop as the economy struggles to pick up speed. ``It's a heck of a rapid ramp-up to get to the third and fourth quarter numbers that the analysts are talking about if we are talking about a first quarter similar to our expectations,'' Hill said. biz.yahoo.com