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Profits Looks To Be Down

Profits looks to be down

Profits looks to be down in this critical earnings week

Even before Walmart’s warning, Wall Street analysts were cutting forecasts for corporate profits over the next year, Matt writes.

Why it matters: After a surge of pandemic-era profitability, corporate America’s fat bottom lines are being pinched by a range of issues: inflation, energy price surges, and, of course, recession jitters.

Driving the news: This week will be the busiest week of second-quarter earnings, with roughly 45% of S&P 500 companies reporting.

By the numbers: At first glance, the start of the season hasn’t been so bad.

About 75% of companies are reporting profits higher than the consensus expectation among analysts.

Still, they’re beating those numbers by a narrower gap than usual, according to data provider Refinitiv.

Yes, but: Since the Q2 earnings season began, analysts have been steadily trimming their profit forecasts, suggesting they don’t like what they’re hearing on the conference calls that typically follow the releases.

Cuts to expected profits are minor so far, or at least they were before Walmart made its announcement.

What they’re saying: “It does seem universally agreed upon that estimates are too high and not reflecting the economic realities ahead,” Piper Sandler analysts wrote in a note to clients yesterday.

Axios Markets By Matt Phillips and Emily Peck · Jul 26, 2022