


Assuming the Q4 consensus falls in tandem with the current trends it is highly like that Q4 of 2022 will produce negative earnings growth and that is not good for S&P 500 index prices. As it is now, the Q4 consensus is 4.9% which is down 310 basis points from its high. The consensus for the 4 th quarter has fallen less than the 3 rd quarter outlook but that will likely change as the 3 rd quarter reporting season wears on. This makes only the second reporting season since the pandemic bottom in which the consensus is falling and the pace and depth of the decline accelerated from the previous quarter.
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The consensus has fallen a full 800 basis points in that time and is on track to hit 0% by the start of the reporting season.

The outlook for Q3 is now only 3.6% compared to the high of 11.6% set earlier this year. At face value, the consensus estimates for Q3, Q4, and the full year ticked lower to new lows over the past two weeks. The outlook for earnings has been in decline for the last two months, which is bad enough on its own, but there are some underlying details that make the situation worse than it appears. The Outlook For Earnings Growth Is Worse Than It Seems The takeaway is the outlook for earnings and earnings growth is weakening and not expected to get any better with the FOMC on track to hike rates by another historic 75 basis points. Those companies which still have strong businesses are having a hard time meeting the demand because of supply chain constraints while the weaker businesses are faced with a bloated inventory. While there are some glimmers that inflation has peaked it's still high, biting into the bottom-line outlook, and compounded by supply chain problems both old and new. The S&P 500 ( NYSEARCA: SPY) 3 rd quarter earnings reporting season is fast approaching and it's time to start preparing for what could be a very bad season.

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