More US companies issue negative earnings guidance for Q3

NEW YORK (Xinhua) – The number of United States (US)-listed companies under S&P 500 Index issuing negative earnings guidance for the third quarter of 2019 is well above the average level in last five years, according to a note issued last Friday by market information supplier FactSet Research Systems Inc.

As many as 82 listed companies with S&P 500 Index out of 113 ones issuing earnings per share guidance offered negative guidance for the third quarter, said John Butters with FactSet.

By contrast, only 74 companies issued negative earning guidance on average in the last five years.

The information technology sector and health care sector saw 29 and 15 companies with negative guidance, surging 45 per cent and 40 per cent from averaged level in the past five years, respectively.

Besides, the consumer discretionary sector has 17 companies with negative earning guidance so far, in line with averaged level in last five years. Multiple market research institutions now maintain underweight or neutral stance on stock markets in the US and other countries as multiple headwinds continue. “Having been equity bulls for most of the decade, we are currently neutral,” said international investment advisory firm MRB Partners Inc in a research note last Friday. MRB said it would return to an overweight if political risks ebb and manufacturing activity firms up.

Conversely, it would de-risk if the service and consumer sectors look to join the manufacturing sector on the downside.

MRB warned that instability and uncertainty from political backdrop is prolonging the sluggishness of global trade and could ultimately undermine economic risk-taking and eventually end the cycle. The probability of monetary stimulus fuelling meaningful market gains in the medium term seems lower than usual as most countries lack the willingness to embark on a more substantial fiscal drive and the efficacy of monetary policy is under question, according to Chief Investment with UBS Global Wealth Management Officer Mark Haefele.

“We underweight equities” while preferring US equities versus euro-zone equities, said Haefele in a research note last Friday.

Though central banks could put a floor under markets, UBS doesn’t believe they have the capacity to push stocks significantly higher in the short term, Haefele said. US stocks failed to make new highs recently despite the Federal Reserve cut the benchmark interest rate for the second time this year on September 18.