Goldman Sachs analysts say both Europe and the US financial markets are vulnerable to declines and in for a bumpy ride the remainder of the year as political risks exacerbate Europe’s weak economy and the US S&P 500 Index faces a projected 2% decline by December.
Though US corporate earnings have greatly impacted share prices these past 18 months, analysts may be underestimating corporate profits this quarter, as most are expecting the earnings recession to reach 18 months in Q3. Within the July to September period, analysts predict S&P 500 Index members’ earnings will fall 1.6%.
But it’s more likely the expected decline will evolve into a gain and companies will beat those estimates, Bloomberg reports. Though analyst forecasts have grown more pessimistic in recent weeks, US companies have been exceeding their forecasts by an average of 3.6% in the past five years. [Bloomberg]
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