Earnings Recession Looms as S&P 500 Companies Brace for Impact

Analysts warn that the S&P 500 index may experience the largest earnings decline since the Covid-19 pandemic, with Q1 2023 S&P earnings set to fall the most since the pandemic. The tech sector is expected to post the most severe warnings, while all eyes will be watching financials after recent bank blowups. 54% of S&P 500 components have lowered their earnings guidance for 2023, dropping revenue forecasts to their lowest since 2020. The index's 12-month price-to-earnings ratio (P/E) is 18.0, reflecting the 7% increase in the S&P 500's price even as the 12-month forward EPS estimate fell during the first quarter. Analysts expect earnings per share to show a 4.6% decline for Q2 after the 6.8% decline for the first quarter, with a pivot back to growth in Q3 and Q4.