US earnings started the quarter on the wrong foot, and things have only got worse. Expectations for the third quarter were dismal, with forecasts for a decline in profits from a year ago. But a recent flurry of high-profile reports has investors scowling at the weak revenue numbers, adding to worries about the state of the US economy and the outlook for corporate America.
International Business Machines, General Electric and Microsoft fell short of revenue expectations, creating a sour mood early in the third-quarter reporting period.
The third quarter is among the most important for investors and economists because it is when companies begin to give a better picture of what the following year may look like.
The pace of earnings reports will accelerate this week, with eight Dow components and 155 S&P 500 companies scheduled to release results, including tech heavyweight Apple.
Just 38 per cent of S&P 500 companies beat expectations on revenue in the past week, compared with 41 per cent since the start of the reporting period, and well below the 62 per cent long-term average, Thomson Reuters data showed.
On the earnings side, the data has been slightly more upbeat: 62 per cent of companies that reported last week beat expectations versus 60.3 per cent since the start of the earnings period, and the 62 per cent long-term average, the data showed.