Forecasts for second-quarter US earnings still look gloomy after a much-better-than feared first quarter season as the likelihood of further interest rate hikes this year creates more potential risks for companies. Analysts expect earnings for S&P 500 companies to fall 5.6% in the second quarter from a year ago, according to IBES data from Refinitiv. Year-over-year earnings rose 0.1% in the first quarter, based on data Friday, much better than the forecast for a 5.1% drop at the start of the reporting season.
The improvement followed upbeat results from a host of big names including Microsoft Corp and Apple Inc. Fourth-quarter 2022 earnings for S&P 500 companies declined 3.2%, so a first-quarter profit fall would have been a second straight quarterly decline, which some strategists call an earnings recession. The last one occurred when Covid-19 hit corporate results in 2020. The second-quarter season does not get rolling until the middle of July, but it is now becoming clearer the Federal Reserve likely has not reached the end of its tightening cycle.
