Daily Management Review

US expects corporate profits to decline in Q1


According to FactSet analysts' predictions, companies in the S&P 500 index will experience an average 6.8% decline in net profit during the first quarter of this year compared to the same period last year, reports The Wall Street Journal.

If the expectations come true, it will mark the second consecutive quarter where big US firms' quarterly profits have decreased.

The first-quarter corporate reporting season in the US begins this week, and analysts have noted several significant negative factors: the inflation's continued rise, the Fed's increase in benchmark interest rates, and issues in the financial sector, which included the failure of US bank SVB and the crisis surrounding Swiss bank Credit Suisse, which was prevented from failing by Swiss authorities who arranged for an emergency purchase by the nation's top investment bank. 

“Corporate performance shows that we are already in a recession”, says Eric Gordon, an analyst at Brown Advisory, quoted by the WSJ.

source: wsj.com