Get ready for a lackluster earnings season.
Financial analysts say companies in the Standard & Poor's 500 index barely grew their earnings in the first three months of this year compared with the first quarter of 2012. Analysts forecast an increase of 0.5 percent, a sharp slowdown from the 7.7 percent growth in the fourth quarter of last year.
Corporate America begins to report first-quarter earnings on April 8, when aluminum maker Alcoa becomes the first company in the Dow Jones industrial average to report results. But investors have already heard about the early 2013 performance of some big companies, and it's often been disappointing.
FedEx, for example, said that its net income fell 31 percent for its fiscal quarter, which ended Feb. 28. It also cut its full-year earnings forecast. Oracle's fiscal quarter likewise ended on Feb. 28, and it surprised Wall Street with a drop in revenue. Sales fell across Oracle's hardware and software businesses, and such broad-based weakness raises questions about its peers, JPMorgan analysts say. Technology is one of the five sectors of the S&P 500 that financial analysts expect to post a drop in first-quarter earnings.
To be sure, analysts have a history of under-estimating corporate earnings. For 16 straight quarters, stretching back to 2009, analysts' forecasts have proven too low on at least 65 percent of S&P 500 companies, according to Barclays Capital. At the start of the last earnings season, analysts were forecasting growth of just 3.4 percent. It ended up more than double that.Associated Press