S&P 500 Now Projected to Report a Year-over-Year Decline in Earnings in CY 2020

Analysts now expect the S&P 500 to report a year-over-year decline in earnings in Q1 2020 (-5.2%), Q2 2020 (-10.0%), and Q3 2020 (-1.1%). Given these estimated declines for the first three quarters of the year, do analysts now believe the index will report a year-over-year decline in earnings for CY 2020?

The answer is yes.

During the past week, the aggregate earnings growth rate for CY 2020 changed from slight year-over-year earnings growth on March 24 (+0.6%) to a slight year-over-year earnings decline on March 25 (less than -0.1%).

However, expectations for earnings growth for CY 2020 have been falling over the past few months. On September 30, the estimated earnings growth rate for CY 2020 was 10.4%. By December 31, the estimated earnings growth rate had fallen to 9.2%. Today, the estimated earnings decline is -1.2%.

Five of the 11 sectors are now projected to report a year-over-year decrease in earnings for CY 2020: Energy (-62.3%), Industrials (-10.2%), Consumer Discretionary (-8.0%), Materials (-3.5%), and Financials (-2.2%).

If the index reports a year-over-year decline in earnings of -1.2% CY 2020, it will mark the first time the index has reported an annual year-over-year decrease in earnings since CY 2015 (-0.6%). It will also mark the largest annual year-over-year decrease in earnings since CY 2008 (-25.4%). Analysts in aggregate currently expect earnings growth to return in CY 2021 (14.5%).