“When you look at the cost of wages and the cost of capital I think margins are coming under a fair amount of pressure,” said Jack Ablin, chief investment officer at Cresset Capital. “Companies were enjoying nominal growth, they had some pricing power, but their volumes were either shrinking or just staying the same.”
Analysts had higher expectations ahead of the quarter, forecasting a 0.3 per cent dip in profits on December 31. While earnings forecasts typically decline over a quarter, they did so more than as much as the average over the past five years during the opening three months of 2023. Only the utilities sector finished the quarter with higher expectations than which it started.
Of the 11 sectors in the S&P 500, materials is expected to take the worst earnings hit, with a 35.6 per cent decline forecast. New orders for durable goods in the U.S. fell for the second month in a row in February, while analysts had expected a rebound in buying.