U.S. Corporate Profit Growth Decelerating
"Over the past two weeks, analysts have lowered their estimates for fourth quarter earnings growth. Analysts now forecast earnings for the S&P 500 to have increased 9.1% last quarter compared to 10% growth expected on January 1. This would mark the first quarter since the second quarter of 2003 that earnings failed to grow at a double-digit rate. If companies end up exceeding current estimates and post double-digit gains, it would be 14 consecutive quarter of double-digit earnings growth and beat the previous record of 13 quarters set between the fourth quarter 1992 and the fourth quarter 1995. The financial sector is the major driver for S&P 500 earnings for the fourth quarter. Financial earnings are expected to have grown 34% last quarter. If the financial sector is excluded, the rest of the S&P 500 is expected to have increased earnings by 1.9%. Earnings growth for financial companies are expected to slow to single digits for 2007 and the expected earnings growth for the S&P 500 is similarly muted. "