Corporate Earnings Season In Focus Amid Stronger U.S. Dollar, Drop in Oil Prices

aerU.S. stock indexes are trading flat on Friday and will try to maintain weekly gains over 1 percent as first quarter 2015 corporate earnings season gets underway with a host of results scheduled next week from several banks and other companies.

Earnings forecasts for the first quarter of 2015 have been lowered across many sectors such as the energy sector which will see lower profits due to the drop in oil prices and a rising U.S. dollar that occurred from December 31 to March 31st.

Although U.S. exports account for approximately 15 percent of GDP, a stronger U.S. dollar hurts U.S. businesses with multi-national sales exposure and impacts U.S. tourism.

According to Factset, first quarter 2015 year over year earnings for the S&P 500 are projected to decline by 4.6 percent. If the index reports a year over year decline for the quarter, it will be the first time since Q3 2012 (-1.0 percent).

On December 31st, first quarter 2015 earnings was projected to rise 4.3 percent.

All ten sectors have lower growth rates compared to the earlier forecast on December 31st due to downward revisions to earnings estimates, led by the energy sector which alone accounts for nearly half (46 percent) of the expected decline in earnings for Q1 from December 31st to March 31st.

The energy sector is expected to report the largest year over year slide in sales for the quarter with a forecast of -37.4 percent.

The health care sector is expected to report the highest growth rate at 10.6 percent.

This week Aluminum maker Alcoa reported mixed earnings and showed weaker sales, highlighting concerns that falling energy prices and a rising U.S. dollar have impacted the company.

On Monday retail sales will be reported.

-John Schweitzer





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