U,S. 2nd-quarter earnings projected to fall 36 pct

Fri Jul 10, 2009 10:25pm BST
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NEW YORK, July 10 (Reuters) - Second-quarter earnings for Standard & Poor's 500 companies are expected to fall 35.7 percent, about the same projection as a week earlier.

Data compiled by Thomson Reuters showed a 35.5 percent decline in earnings a week ago, just before the reporting period kicked off with results from aluminum producer Alcoa Inc (AA.N: Quote, Profile, Research).

On Wednesday, Alcoa reported a smaller-than-expected loss, but late Thursday energy company Chevron Corp (CVX.N: Quote, Profile, Research) in an interim report warned that any benefit from higher oil prices would be mostly offset by a weaker dollar in the second quarter. Oil futures prices were up more than 50 percent in the second quarter.

The number of companies reporting is expected to pick up sharply next week, with six Dow Jones industrials components and 31 S&P 500 companies scheduled to give results. Several banks including Goldman Sachs (GS.N: Quote, Profile, Research) are on the agenda, along with chip maker Intel Corp. (INTC.O: Quote, Profile, Research) and General Electric Co. (GE.N: Quote, Profile, Research).

Materials, energy, financials and industrials are the sectors with the lowest expected earnings growth for the quarter, and all 10 S&P sectors are expected to show year-over-year earnings declines, Thomson Reuters data showed.

The health care sector is expected to put in the best earnings performance, with an expected decline of just 2 percent. Thomson Reuters analysts said in their report that the sector would show positive earnings growth if pharmaceutical results were subtracted.

Materials, with a projected earnings decline of 78 percent for the quarter, is expected to be the worst-performing sector.

Second-quarter projections have worsened since mid-April, when estimates showed a decline of just 31.7 percent, the report showed.

That change may be "attributed to downward revisions to estimates across a few sectors, partially offset by the removal of General Motors GMGMQ.PK from the (S&P) index," the report said.

GM was removed as the auto maker went into bankruptcy. On Friday it was announced the company was able to emerge from it as it closed a deal that sold key operations to a new company majority-owned by the U.S. Treasury. (Editing by Leslie Adler)

 
 
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