US earnings likely to hit by Coronavirus outbreak
Reportedly the hit to US corporate earnings from the coronavirus epidemic is getting harder and messier to predict.
Wall Street strategists have been slashing forecasts as the impact of the virus is set to be felt far further than the first quarter, putting 2020 profit growth in jeopardy. A week previous, many market watchers said they expected the virus to affect earnings in the first quarter but not much beyond that.
Meanwhile worries about the expected impact escalated last week as the virus, which was first detected in china spread rapidly to countries such as south korea, italy and iran, causing the S&P 500 .SPX to suffer its biggest weekly drop since the 2008 global financial crisis. In the united states, New York's governor confirmed his state's first positive case on Sunday. Peter Tuz, president of Chase Investment Counsel in Charlottesville, virginia said this is easily going to spill over into the second quarter.
Moreover citigroup equity strategist Tobias Levkovich is forecasting a slight fall year over year in 2020 earnings with the impact occurring in the first half of the year as production disruptions emerge and travel is hammered.
However, if it triggered a global recession, profits could Levkovich wrote decline near 25 per cent and equity markets fall similarly as stocks typically track earnings given past patterns when downturns occurred.