LIVE MARKETS-US Q1 earnings forecasts down since start of year

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US Q1 EARNINGS FORECASTS DOWN SINCE START OF YEAR

After a much-stronger-than-expected fourth-quarter 2024 U.S. earnings season, investors will soon turn their attention to the next earnings season, with forecasts for the first quarter of 2025 down since the start of the year.

Forecasts tend to drop as companies beat analysts' earnings expectations for one quarter and guide lower for the next, but the recent selloff in U.S. stocks is adding to worries for some investors about the outlook for earnings and valuations.

Analysts as of Friday were expecting year-over-year earnings growth for S&P 500 .SPX companies in the first quarter of 8%, down from estimated growth of 12.2% on Jan. 1, according to LSEG.

Fourth-quarter 2024 earnings growth of 17% is the highest quarterly growth for S&P 500 companies since 2021, LSEG said, based on results from 491 of the S&P 500 companies.

With tariffs and other changes being pushed through by the Trump administration, investors may look for less expensive valuations overseas, some strategists have said.

"That's... part of the backdrop - that you could go invest in other places of the world with much lower multiples and maybe at least not be exposed to the expensive valuations of the U.S. while the U.S. pushes its structural shift," said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.

(Caroline Valetkevitch)

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