(Adds revenue and sector projections)
By Caroline Valetkevitch
NEW YORK Oct 18 S&P 500 earnings are now
expected have increased slightly in the third quarter, reversing
forecasts for another quarter of profit declines, Thomson
Reuters data showed.
A quarter of profit growth would mark an end to the U.S.
profit recession that began in the third quarter of 2015 and
fuel investor hopes that better earnings can boost U.S. stocks
in the final months of the year.
The improvement in earnings projections followed mostly
stronger-than-expected results from Bank of America and
other financials, though reports are in so far from just 52 of
the S&P 500 companies.
Based on those results and estimates for the rest of the
companies as of Tuesday, S&P 500 earnings are projected to have
increased 0.2 percent in the quarter ended Sept. 30. That would
be up from a decline of 0.5 percent forecast two weeks ago, the
"I think there is growing consensus that perhaps this a
turnaround in the earnings for the S&P 500," said Bucky Hellwig,
senior vice president at BB&T Wealth Management in Birmingham,
"Fundamentally, that's a positive, but it's a psychological
positive as well. And if we see follow-through in the next
couple of quarters, it helps to address some of the valuation
concerns that some investors have."
After rising sharply in early July, the benchmark index
has been drifting mostly sideways to lower. The S&P 500's
forward price-to-earnings ratio sits at 16.5, above its
long-term average of 15, Thomson Reuters data shows.
The index is down 1.2 percent for the month to date, and the
final stretch of the U.S. presidential race is expected to take
at least some investor focus away from this earnings season.
Most sectors are expected to show profit growth for the
third quarter, though energy earnings are estimated to have
fallen more than 70 percent from a year ago.
Revenue is also projected to have gained for the quarter,
with year-over-year growth now seen at 2.5 percent.
If the current projections turn out to be correct, the third
quarter will be the first period since the fourth quarter of
2014 of both profit and revenue growth for S&P 500 companies.
(Reporting by Caroline Valetkevitch; Editing by Chris Reese and