“While earnings reports have been strong for the fourth quarter, with about 70 percent of Standard & Poor’s 500 Index companies beating analysts’ estimates, the outlook going forward isn’t so hot.
A total of 59 percent of those companies have lowered their outlook for 2014, according to The Earnings Scout research firm.
“Fourth-quarter numbers are actually stellar,” Nick Raich, the firm’s CEO, told CNBC. “But that doesn’t matter. The fourth quarter was priced in six months ago. It’s all about the revisions to the first quarter and beyond.”
And it’s not that companies are simply trying to manipulate expectations for their earnings by lowballing their forecasts, Raich says.
“We saw improvement in underlying earnings expectations for the past two years,” he said. “We’re seeing a deterioration in those trends. The magnitude in downward revisions has worsened. That’s a big reason stocks are under pressure.”
The Standard & Poor’s 500 Index has slipped 3 percent so far this year.
As for the Federal Reserve, Raich doesn’t think it’s going to exit quantitative easing completely, because that would put the economic recovery at risk…..”
If you enjoy the content at iBankCoin, please follow us on Twitter
