Goldman Sachs: American companies will have zero profit growth this year

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This was supposed to be the year that the bottom line of Corporate America rebounded after lackluster profit reports for most of 2019. But the coronavirus outbreak is threatening to end the earnings recovery before it even begins.

Goldman Sachs warned in a report Thursday that it now thinks US companies"will generate no earnings growth in 2020." The bank said this forecast is based on"the likelihood that the impact of the virus becomes widespread."

Stocks around the world have plunged this week and several key global market indexes are now in a correction, a 10% drop from recent highs. Gold has soared and long-term US bond yields have fallen to record lows in a classic flight to safety. The Goldman analysts added that they also expect a"severe decline in Chinese economic activity," lower demand for US exporters, disruptions to supply chains and higher levels of uncertainty.

Although Goldman Sachs has turned bearish on their earnings outlook, the rest of Wall Street remains slightly more hopeful -- for now. According to estimates tracked by FactSet Research, analysts are forecasting a 0.9% increase in S&P 500 profits for the first quarter and a full year earnings increase of 7.5%.

 

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