March 18, 2020 / 6:33 PM / in 12 days

UPDATE 1-S&P 500 earnings expected to decline 0.2% in first quarter from year earlier

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By Caroline Valetkevitch

NEW YORK, March 18 (Reuters) - S&P 500 companies' earnings are expected to decline in the first quarter from the year-earlier period, reversing a forecast for profit gains, according to IBES data from Refinitiv, as companies face the toll from the coronavirus outbreak.

As of Wednesday, analysts were forecasting a 0.2% year-over-year fall in earnings for the S&P 500 for the quarter. That is down sharply from a Jan. 1 forecast for 6.3% growth, per Refinitiv's data, which is based on estimates from analysts who cover individual companies.

Analysts' profit estimates have deteriorated in recent weeks as the rapidly spreading virus has hit spending and business activity, with many experts now expecting a recession in the United States.

Their S&P 500 earnings forecast for 2020 has dropped as well, but analysts are still expecting profit growth of 4.1% for the year. That is down from an estimate of 9.7% at the start of 2020. For weeks now, strategists at big Wall Street banks have been slashing their profit forecasts as well, and some have said the impact of the virus will reach well beyond the first quarter and could easily put 2020 profit growth in jeopardy.

"With earnings estimates, you're on the down elevator right now, so you'll have several cuts as people are trying to figure out when they hit the ground level," said Wayne Wicker, chief investment officer of Vantagepoint Investment Advisers.

"I hear a lot fewer people talking about this V-shaped recovery as we start to broaden out the magnitude of what's going to happen."

After a lackluster year of profit growth in 2019, many investors had been hoping earnings this year would be strong enough to support further market gains. (Reporting by Caroline Valetkevitch; Editing by Chris Reese and Andrea Ricci)

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