SAN FRANCISCO (MarketWatch) Health care and financial earnings are looking to be some of the relatively few bright spots in what promises to be a dreary reporting season. <\/p>\n
Stocks are getting hit hard as the first quarter draws to a close. The Dow Jones Industrial Average DJIA, +0.19% the S&P 500 Index SPX, +0.24% and the Nasdaq Composite Index COMP, +0.57% all finished down more than 2% last week. On Friday, government data showed the rise in fourth-quarter GDP unchanged at 2.2% and the first decline in quarterly profits since 2008. <\/p>\n
Whats more, U.S. stocks are starting the year with $44 billion less in investment capital, the biggest outflow since 2009. <\/p>\n
Over the first quarter, projected earnings for the S&P 500 went from forecast growth of 4.2% to a decline of 4.6%, in large part because earnings declines in the energy sector widened considerably, according to John Butters, senior earnings analyst at FactSet. <\/p>\n
In fact, forecasts over the quarter did not improve for any one sector, with the tech, consumer staples, and materials sectors all swinging from projected gains to declines over the quarter. <\/p>\n
That leaves health care, financials, consumer discretionary, and industrials as the only sectors left expected to post earnings gains this season. <\/p>\n
With guidance fairly negative this earnings season, the least negative guidance is coming out of the health care and financials sector, according to FactSet. Of financial companies providing guidance, 33% expect to top the Wall Street consensus, and 20% of health care companies expect to do the same. In contrast, only 16% of companies in the S&P 500 have provided a forecast that tops estimates. <\/p>\n
Plus, stocks may be getting headwinds from a pre-earnings pause in stock buybacks, which hit a record high quarter in February, following a near record year in 2014. Sectors that have accounted for more than 50% of all buybacks on the S&P 500 are tech, consumer discretionary, and financials. <\/p>\n
Plus, the U.S. heath care and financials sectors are fairly well insulated from the effect the stronger dollar is having on international sales as the bulk of revenue from most companies in those sectors comes from domestic sources. <\/p>\n
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Market Snapshot: Health care, financial stocks looking best going into tough earnings season<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" SAN FRANCISCO (MarketWatch) Health care and financial earnings are looking to be some of the relatively few bright spots in what promises to be a dreary reporting season. Continue reading