DOW JONES NEWSWIRES
Composite third-quarter results for companies in the Standard & Poor's 500 Index are expected to fall 18% from a year earlier, according to Thomson Reuters, as earnings so far have come in better than anticipated.
Last week's forecast was 23%, and the improvement comes amid results from the financial, information-technology and industrial sectors. Outperformers in those areas included Wells Fargo Co. (WFC), Capital One Financial Corp. (COF), Microsoft Corp. (MSFT), Apple Inc (AAPL), Caterpillar Inc. (CAT) and 3M Co. (MMM).
The composite is calculated from actual results as well as estimates for companies that haven't yet reported.
Of the 199 companies in the S&P 500 that have posted results, 81% reported earnings above analysts' expectations, 7% matched and 12% reported earnings below estimates. In a typical quarter, 61% of companies beat estimates, 18% match and 21% miss. The highest percentage of companies reporting earnings above expectations for a quarter is 73%, in both the second quarter of 2009 and first quarter of 2004.
Altogether, companies are reporting earnings 18% above estimates, which is above both the long-term surprise factor and the surprise factor for the past two years. The highest surprise factor for a quarter is 13%, recorded in the second quarter.
The financial sector is reporting both the highest surprise factor and the highest earnings growth, more than double a year earlier, for the latest quarter. The consumer discretionary sector has seen earnings up 25% and health-care earnings are up a fraction.
Sectors with the largest earnings declines are energy, down 64%; materials, which includes chemicals and steel, down 54%; and industrial, down 42%.
Next week is the second peak week of the current reporting cycle, with four components of the Dow Jones Industrial Average and nearly a third of the S&P 500 companies reporting.
-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357; Kathy.Shwiff@dowjones.com