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The Stock Market Is Flashing Warning Signs of a Corporate Profit Collapse

  • JPMorgan study shows stocks reflecting 9% decline in earnings
  • Goldman math suggests 3.7% growth, a drastic slowdown vs 2018
Trading On The Floor Of The NYSE As U.S. Stocks Mixed
Photographer: Michael Nagle/Bloomberg

Everyone knows profit growth is poised to cool this year. But by how much? Analysts who try to answer that question by looking at signals embedded in the stock market are coming up with some worrisome numbers.

Going by history, the 16 percent decline in the S&P 500 between Sept. 20 and Jan. 3 reflected investors pricing in better-than-even odds of an economic recession in 2019 and a 9 percent decline in earnings, JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a note. Another approach, the dividend discount model, suggested markets anticipate annual profit growth of 3.7 percent through 2023, according to Goldman strategists led by David Kostin.