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Another Profits Recession Is Underway - Implications For The Stock Market

While the stellar January jobs report stole most of the financial news headlines over the weekend, investors should be focusing on what is far more important - the recession in corporate profits that is currently underway. The earnings outlook for companies in the S&P 500 index (SPY) has gone from respectable to dismal in just six short weeks. Whereas at the beginning of the year the consensus of analysts was expecting earnings growth of 4% for the first quarter of 2015, it is now expecting a year-over-year decline for both the first and second quarters of 2015, according to data compiled by FactSet. A back-to-back decline is a rare occurrence that should not be dismissed.

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Historical Precedent

Using the quarterly index earnings data compiled by Howard Silverblatt, the senior index analyst with S&P Dow Jones Indices, I could find only four prior occasions dating back to… Read More …