Coronavirus expected to hurt US earnings harder and longer

NEW YORK: The hit to US corporate earnings from the coronavirus epidemic is getting harder and messier to predict.

Wall Street strategists have been slashing forecasts as the impact from the virus is set to be felt far further than the first quarter, putting 2020 profit growth in jeopardy.

A week previous, many market watchers said they expected the virus to affect earnings in the first quarter but not much beyond that.

Worries about the expected impact escalated last week as the virus, which was first detected in China spread rapidly to countries such as South Korea, Italy and Iran, causing the S&P 500 to suffer its biggest weekly drop since the 2008 global financial crisis. In the United States, New York’s governor confirmed his state’s first positive case on Sunday.

“This is easily going to spill over into the second quarter, ” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

“There isn’t a day that goes by now without half a dozen companies expecting some sort of negative effect.”

Citigroup equity strategist Tobias Levkovich is forecasting a slight fall year-over-year in 2020 earnings with the impact occurring in the first half of the year as production disruptions emerge and travel is hammered.

However, if it triggered a global recession, profits could “decline near 25% and equity markets fall similarly as stocks typically track earnings given past patterns when downturns occurred, ” Levkovich wrote. — Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3

Did you find this article insightful?


Next In Business News

KLCI tops 1,600 as Budget 2021 debates continue
RHB Research keeps Buy call on Sime Property, TP 88 sen
Honda Malaysia issues recall for 2,784 of 20-year old Accord, CR-V
Quick take: Vivocom continues to slide, GETS slips
Market cautious, eyes on Budget passage
OCK earnings remain highly sustainable on recurring income, says Kenanga
Maybank IB Research has Buy on IJM Corp, higher TP of RM1.98
Kenanga maintains 'market perform' on IOI Properties
Asian shares slip as investors pause for breath after massive rally
South Korea leaves policy rate unchanged

Stories You'll Enjoy