Bank of America Corp. cut its earnings estimates for the Standard & Poor’s 500 Index for 2012 and 2013, citing concern that lower commodity prices and slower global growth will weigh on corporate profits.
Strategists for the Charlotte, North Carolina-based bank reduced earnings forecasts for S&P 500 companies by 1.4 percent for this year and next year. Strategists Dan Suzuki, Savita Subramanian and Jill Carey now project income of $102 per share for 2012 and $109 for 2013, implying growth of 4 percent and 7 percent, respectively, according to a note to clients today.
“Although the bottom-up consensus forecasts have continued to drift lower since last summer, they still appear too optimistic,” the strategists wrote in a note today. “The recent weakness in earnings revision and guidance trends may be a sign that consensus expectations are in the early stages of being reset lower.”
The S&P 500 is heading for a sixth day of losses amid signs that corporate earnings are falling. Marriott International Inc., the biggest publicly traded U.S. hotel chain, cut its forecast for growth outside North America and Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., told CNBC that economic growth in the U.S. is slowing.
Energy companies are estimated to post the weakest results this year, with a 10 percent drop in earnings, after oil hit a nine-month low in June, Bank of America said. The decline in profits from the oil and gas industry will be offset by increased income from technology companies, such as Apple Inc.
Analysts are forecasting the first decline in quarterly earnings since 2009, data compiled by Bloomberg show, after slowdowns in China and Europe reduced overseas demand. Earnings at S&P 500 companies probably decreased 1.8 percent in the second quarter and will increase 7.2 percent for all of 2012, based on analysts’ forecasts compiled by Bloomberg.
The U.S. earnings season started July 9 after aluminum maker Alcoa Inc. reported earnings that beat analysts’ estimates.