Benchmarks Are Likely To Open Flat – Economic Highlights

Including this morning’s reports from the likes of Coach (COH), Kellogg (K) and others, we now have Q2 results from 385 S&P 500 members or 77.9% of the index’s total membership. Total earnings for these 385 index members are down -2.3% on -4.2% lower revenues, with 69.4% beating EPS estimates and 50.5% coming ahead of top-line expectations.

The -60.4% drop in the Energy sector’s total Q2 earnings on -31.7% lower revenues is the biggest drag on the aggregate growth picture. Excluding the Energy sector, total earnings for the S&P 500 would be up +5.3% on +1.2% higher revenues. But this is weak growth performance relative to other recent periods, whether we look at the data with or without the Energy sector. The composite picture for Q2, combining the actual results from the 385 S&P 500 members that have reported results to estimates for the still-to-come 115 index members, is for total earnings to decline -2.2% from the same period last year on -3.7% lower revenues.

Estimates for the current period are coming down as companies overwhelmingly guide lower while reporting Q2 results, in line with the trend of the last couple of years. Total earnings for the S&P 500 index are currently expected to be down -4.8% in Q3 from the same period last year, a drop from the -4% decline expected last week and the roughly flat showing expected in early April. The one positive in this otherwise sub-par growth picture is that Q3 estimates aren’t falling as much as was the case in the comparable periods in the last two quarters.