First-quarter US earnings outlook looks less rosy with tariff worries in focus

2 months ago 28

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Caroline Valetkevitch

Mon, Mar 24, 2025, 3:02 AM 3 min read

Apple (AAPL), Tesla (TSLA) and Ford Motor (F) are among companies contributing the astir to precocious lowered estimates for the quarter, on with immoderate insurers, whose projections person been wounded by fires successful California aboriginal this year, according to Tajinder Dhillon, elder probe expert astatine LSEG.

S&P 500 forecasts for the archetypal 4th of 2025 person fallen by 4.5 percent points since January 1, the largest downward revision since the 4th fourth of 2023, helium said.

Earnings maturation for S&P 500 companies is present seen astatine 7.7% year-over-year, which would beryllium the lowest since 2023's 3rd 4th and a large diminution from 17.1% successful the 4th fourth of 2024, based connected Friday's LSEG data.

While a fistful of companies person already reported connected the quarter, the unofficial commencement of the first-quarter play is inactive weeks away.

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"You cognize there's this antagonistic bias retired there. You conscionable don't cognize to what degree," said Michael O'Rourke, main marketplace strategist astatine JonesTrading successful Stamford, Connecticut.

Earnings estimates typically diminution successful the weeks up of a caller reporting play arsenic companies usher much conservatively, but the bulk of companies often spell connected to bushed those lowered expectations.

Fears that import tariffs and retaliation by U.S. commercialized partners, on with authorities cutbacks nether President Donald Trump successful the archetypal months of his 2nd term, mightiness propulsion the system into recession person accrued successful caller weeks.

On March 13, the S&P 500 confirmed it is successful a correction by ending down much than 10% from its February 19 grounds precocious close.

"A batch of radical are disquieted astir things similar tariffs ... Really, it's a wide economical slowdown that is the 1 happening that would beryllium precise hard for companies to contend with," said Sameer Samana, elder planetary marketplace strategist astatine Wells Fargo Investment Institute.

Some investors person hoped that first-quarter net could supply a catalyst for gains successful the marketplace aft the crisp selloff. The S&P 500 is inactive trading astatine a aggregate of 21 times guardant earnings, compared with a 10-year mean price-to-earnings ratio of astir 18, based connected LSEG data.

Apple connected January 30 reported net for the 4th ended December 28 that bushed analysts' expectations, but iPhone income and China gross for the vacation 4th were anemic due to the fact that of contention successful China and a dilatory rollout of artificial quality features.