As Wall Street Seeks A Spark, Q2 Earnings Expected To Fizzle

New York, NY (AHN) - With many stocks on Wall Street trading at new lows, second quarter earnings will probably not offer much to rally on. Standard & Poor's expects earnings for their S&P 500 index to be 10 percent lower.

A Thomson Financial poll of analysts expects overall earnings to be even lower, declining 13.5 percent.

In a time of rising oil prices, a slumping housing market and the financial sector struggled to turn a profit; gone are the days of double digit earnings growth we experienced in the first half of the decade.

Wall Street has struggled to show any kind of earnings growth the past few quarters with the financial sector taking huge write downs to account for defaults on sub-prime loans. For the second quarter, the financial sector is expected to report a 69 percent decline in earnings compared to Q2 a year ago, according to Thomson Financial.

If you remove the financial sector, Thomson Financial expects total earnings growth of roughly 9 percent for Q2.

"The feeling is that this will be a sloppy earnings season, the tone of which is going to be very much like the previous three quarters," said Phil Orlando, chief equity market strategist at Federated Investors, according to the Associated Press. "The banks and the housing sector, on through autos and retailers, are the problem children."

The possibility of upside guidance for Q3 is also reduced as companies are hesitant to raise expectations during tough markets as conditions can swing out of favor without warning.

"Any guidance that management provides, from a self-serving standpoint, will be downbeat and cautious," Orlando said. "They will try to set the bar as low as possible to engineer an upside surprise in the third quarter."

Next week will see second quarter earnings reports from seven Dow Jones Industrial components and 53 S&P 500 companies.