The Wall Street Journal correctly reports that investors continue to reach for yield despite crumbling earnings.
The third quarter was supposed to be when earnings growth returned to U.S. companies. Not anymore.
Companies in the S&P 500 are now expected to report an earnings decline for the sixth consecutive quarter in the coming weeks, according to analysts polled by FactSet.
That slump would be the longest since FactSet began tracking the data in 2008.
For the third quarter, the energy sector is projected to yet again report the largest year-over-year earnings decline of all sectors in the S&P 500, with a drop of 66% expected. It would mark the eighth consecutive quarter that energy companies in the index have reported a year-over-year fall in earnings.
Revenue growth, meanwhile, is set to return for companies in the S&P 500 for the first time since the end of 2014, according to analysts polled by FactSet. Nine of the 11 sectors are predicted to report year-over-year sales growth during the third quarter. Consumer-discretionary companies lead with a projected rise of 8.7%.
One reason stocks continue to climb even as earnings shrink is easy-money central-bank policies. Some investors are using the resulting low government-bond yields as justification to buy more stocks in a search for yield, pushing up major indexes.
Factset Earnings Insight
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Dick Young
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