Futures on theDow Jones Industrial Average (DJIA)declined on Wednesday, giving back some of their early-week gains as investors braced forcorporate America’s longest earnings recessionin years.
Dow Futures Fall; S&P 500, Nasdaq Futures Follow
Futures contracts on all three major US indexes edged lower through the Asian session, setting the stage for a weak start to New York trading at 9: 30 am ET. Dow Jones futures declined 81 points, or 0.3%, to trade at 26, 921.
The December contract for the S&P 500 Index declined 0.3% to 2, 990. 00 Nasdaq 100 mini futures contracts tumbled 0.2% to 7, 940. 75
US equities traded sharply higher on Tuesdayas optimism surrounding U.S.-China trade talks continued to reverberate. The Dow was up more than 300 points earlier in the day before closing on a gain of 237 points.
Earnings Recession Likely for US Companies
Corporate earnings surprised to the upside on Tuesday, with J.P. Morgan Chase (NYSE: JPM), Citigroup (NYSE: C) and UnitedHealth Group (NYSE: UNH) posting better than expected top and bottom-line results. These blue-chip companies masked what many analysts believe will be another disappointing quarter for U.S. companies.The S&P 500 is expected to reportan earnings decline of 4.6% in the third quarter, according to FactSet, a financial research firm. If the forecast holds, it would mark the third consecutive quarter of year-over-year declines – the longest stretch since 2015 – 16.
Earnings have been revised sharply lower since the end of the second quarter, when FactSet called for an earnings slump of only 0.6%. Unlike in June, FactSet now expects all 11 S&P 500 companies to report earnings declines.
US companies are not only feeling the pinch of a protracted trade war, they have reported negative impacts from foreign exchange rates. According to FactSet, of the 22 S&P 500 companies to have reported earnings through Oct. 10, half cited foreign exchange rates “as a factor that either had a negative impact on earnings or revenues in Q3 or is expected to have a negative impact” in the future.
This article was edited byJosiah Wilmoth.
Last modified (UTC): October 16, 2019 04: 16
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