NEW YORK – Corporate outlook statements have been negative for the seventh week running, recording the worst weekly performance since October 2001, data from Reuters Estimates showed Monday.
For the week ended Oct. 8, there were 38 positive guidance statements and 97 negative outlooks from U.S. companies. That yielded a positive-to-negative pre-announcement ratio of 0.39 — calculated by dividing the number of negative statements by the positive announcements. That was the worst weekly performance since October 2001.
"I think it is due to a multitude of factors — higher energy prices are going to have an effect, and we're just seeing an overall slowdown," said Reuters Senior Market Analyst Ashwani Kaul.
"We've seen a drop-off in demand, especially from Asia," he added.
The Technology and Consumer Cyclical Goods & Services sectors reported 77 percent of the negative outlooks, he said.
Companies in the Consumer Cyclical Goods & Services sectors, which posted 11 positive pre-announcements and 29 negative pre-announcements, cited a slowdown in retail traffic in September, shipping delays and price reductions as the primary reasons for negative outlooks.
Companies in the Technology sector, which reported 14 positive pre-announcements and 46 negative pre-announcements, blamed weaker demand, especially in Asia and Europe, and shipment delays as the primary reasons for negative guidance.
Earnings expectations for the third quarter have edged down compared with last week's projections.
According to Reuters Estimates, earnings from the S&P 500 companies are currently projected to rise 12.0 percent, compared with rises of 12.3 percent expected last week and 13.4 percent expected when the third quarter started.
The July-September earnings reporting season gets into full swing this week with reports from companies including Intel Corp. (INTC) and Yahoo Inc. (YHOO) on Tuesday, and Bank of America Corp. (BAC) and Citigroup Inc. (C) on Thursday.
During the week ended Oct. 8, Pulte Homes Inc. (PHM), the No. 2 U.S. home builder, warned of lower-than-expected third-quarter earnings due to weak sales in Las Vegas. Federated Department Stores Inc. (FD), parent of Macy's and Bloomingdale's, reported flat September sales at stores open at least a year and forecast similar results for the full third quarter.