US earnings set to be weakest since COVID pandemic, Goldman Sachs warns

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Profit margins are expected to decline as an economic slump weighs on top companies.

Analysts project that earnings per share results for companies listed in the broad-based S&P 500 will plunge by 7% in the first quarter compared to the same period one year ago, Goldman’s Lily Calcagnini and David Kostin said in a client note“If analyst projections are realized, this quarter will represent the trough in S&P 500 earnings growth,” the analysts said, adding that profit margins are likely to shrink given the tough conditions.

The latest round of corporate earnings will emerge as US companies weather concerns about the stability of the US banking sector and the Federal Reserve’s ongoing slate of interest rate hikes.Investors will get their first round of major results on April 14, when BlackRock, Wells Fargo, JPMorgan Chase and Citigroup are all slated to report their quarterly earnings.

The Goldman strategists pointed to several key trends that Wall Street will be tracking closely during the uncertain period, including signs of a slowdown in cash spending, company initiatives in the burgeoning artificial intelligence sector, China’s effort to re-emerge from COVID-19 lockdowns and profit margins at US firms.The experts see bank earnings jumping by 11% compared to last year, despite lingering “uncertainty” about the economic outlook.

 

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