Goldman says earnings may grow just 3% this year

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The Apple emblem is seen on the window at an Apple Store on January 7, 2019 in Beijing, China.

Goldman Sachs is predicting that earnings development in 2019 may very well be fairly disappointing, advising shoppers to keep away from corporations leveraged to robust financial development.

In a analysis word to shoppers this weekend, the agency gave a forecast that ought to fear bullish traders, warning that the waning fortunes of a number of massive client manufacturers have been sounding a warning about company income this year.

“Weak guidance from several notable companies such as Apple and Macy’s have heightened the focus on S&P 500 earnings growth,” wrote David Kostin, chief fairness strategist for the agency.

“Earnings had been one of the clear bright spots for U.S. equities throughout much of 2018, but some investors are now questioning whether profits can continue to grow in 2019,” he added.

Fourth-quarter earnings season is about to kick off. After it is all mentioned and accomplished, 2018 complete earnings development will are available at a whopping 22 p.c, Goldman estimates, juiced by the tax reduce. But that is previously: During this upcoming earnings season, firm outlooks may very well be cautious and replicate fears of slowing financial development this year, the agency mentioned.

For now, Goldman’s “baseline” state of affairs is for earnings to extend for S&P 500 corporations by 6 p.c in 2019. But that determine assumes a tempo of financial development sooner than what Goldman’s personal economists imagine will come to fruition.

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