NEW YORK - The spike in oil prices due to the escalating conflict between the United States and Iran is causing investors to worry that US corporate earnings will be crimped by rising energy costs.
Though at US$70 a barrel the price of oil remains far below the level that would send the United States into an immediate recession, higher energy costs at a time of increasing geopolitical risks are likely to leave investors and companies skittish, fund managers and analysts said. First-quarter earnings of companies in the S&P 500 are expected to rise 6.2 per cent over the same quarter in 2019, according to estimates from Refinitiv that were made before the jump in oil prices. Those estimates are largely based on assumptions that economic growth will rebound in 2020, though corporate earnings are expected to have fallen by 0.6 per cent in the fourth quarter of 2019; companies will begin announcing their results next week.
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