{"id":20546,"date":"2023-02-01T07:30:09","date_gmt":"2023-02-01T12:30:09","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=20546"},"modified":"2023-02-01T07:30:09","modified_gmt":"2023-02-01T12:30:09","slug":"this-concern-could-take-a-big-bite-out-of-earnings","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/this-concern-could-take-a-big-bite-out-of-earnings\/","title":{"rendered":"This Concern Could Take a Big Bite Out of Earnings"},"content":{"rendered":"

Jeff’s Note:<\/strong> Last year, the public lost $9 trillion in the stock market… but my beta test group has quietly been collecting gains of $2,339, $1,694, and $3,560 in as little as one day.<\/p>\n

So far, they’ve seen 20 winning trades out of 21 recommendations<\/a>… it’s all thanks to a new way of extracting profits from an overlooked corner of today’s volatile market – and it has nothing to do with any of my current products or services.<\/p>\n

I’ll be sharing everything you need to know about this market on Thursday, February 9 at 8 p.m. ET. To learn how you can get in on these fast and profitable trades just click right here<\/a>.<\/p>\n

And read on to see what analyst Clint Brewer says could impact the next big move in stocks…<\/p>\n

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It’s easy to get caught up in 2023’s hot start for the stock market.<\/p>\n

After all, the S&P 500 was up 6% in January.<\/p>\n

But past bear markets hold important lessons for today’s investors.<\/p>\n

For example, during the “dot-com” bear market in January 2001, the S&P kicked off the year with a 3.5% jump. From there, the index went on to plunge as much as 26% that year.<\/p>\n

That decline was driven primarily by a freefall in corporate earnings, which in 2001 fell by 21%.<\/p>\n

But this bear market has been a different story… so far.<\/p>\n

During 2022’s decline that took the S&P 19% lower, earnings helped save the stock market from an even worse fate.<\/p>\n

Once fourth quarter results are tallied over the coming weeks, earnings are expected to have increased modestly last year.<\/p>\n

But that’s changing, and there are emerging signs that corporate earnings are moving from a tailwind to a major headwind.<\/p>\n

Here’s how that could impact the next big move in stocks…<\/p>\n

A Profit Recession<\/h2>\n

Last week<\/a>, I showed you an indicator with a perfect track record of spotting recessions… and it’s flashing a warning signal once again.<\/p>\n

That’s a big concern for investors because recessions can take a big bite out of corporate earnings and drive stock prices lower.<\/p>\n

Just consider the S&P 500’s earnings drawdown from the last three recessions.<\/p>\n

That includes a drop of 54% during the early 2000s… 92% in the financial crisis… and most recently a 33% decline following the pandemic.<\/p>\n

The drop in corporate profits was a major driver behind the S&P 500’s decline, which ranged from -34% to -55% in each of those bear markets.<\/p>\n

Now I’m concerned that falling earnings could deliver the next bear market phase this time around.<\/p>\n

There are signs that the challenges facing the economy are starting to take a toll on the profit outlook.<\/p>\n

Here’s the key metric I’m watching as earnings reports keep rolling in…<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Falling Earnings Estimates<\/h2>\n

The fourth quarter reporting season is well underway, and this week will see reports from corporate heavyweights like Apple (AAPL), Amazon (AMZN), and Google-parent Alphabet (GOOGL).<\/p>\n

You’ll hear stats like how 69% of companies reporting are beating earnings estimates for the most recent quarter.<\/p>\n

But those figures don’t matter – they reflect the past, and not what lies ahead.<\/p>\n

To see what I mean, take a look at how 2023’s earnings estimate for the S&P 500 is evolving in the chart below…<\/p>\n

\"Chart\"<\/div>\n

Back in June, analysts were estimating that earnings for the S&P 500 would hit nearly $250 per share this year.<\/p>\n

That figure has steadily dropped each passing month and is now 10% lower versus six months ago. And that estimate is hitting a territory that would imply a negative year-over-year growth rate in earnings for 2023.<\/p>\n

That means slowing economic activity and inflating costs are already pressuring the bottom line… and we haven’t even seen a recession yet.<\/p>\n

That’s why I’m concerned that corporate profits could have much further to drop as the year unfolds.<\/p>\n

Traders should also stay cautious and not let greed get the best of them as the new year gets underway.<\/p>\n

Best regards,<\/p>\n

Clint Brewer
Analyst, Market Minute<\/em><\/p>\n

<\/p>\n

Reader Mailbag<\/strong><\/h2>\n

How do you think this next earnings report will affect the markets?<\/p>\n

Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com<\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

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