The companies comprising the S&P 500 stock index are expected to report fourth-quarter aggregate earnings of $161 billion, or $17.30 per share — an all-time high — up from $137.6 billion, or $14.88 per share, in the fourth quarter of 2003, according to Howard Silverblatt, S&P market equity analyst. He said companies have been able to increase sales while keeping costs and capital spending even.
And although Mr. Silverblatt expects earnings to continue improving in 2005, albeit at a slower rate, rising interest rates and pension accounting are two concerns. "Companies have enough cash and liquidity" to fund their pensions, he said. "The question is, will they?" Companies will make required pension plan contributions, but uncertainty over pension accounting and whether companies will be able to continue smoothing earnings for pensions could limit additional contributions, he said.
Mr. Silverblatt said he expects the S&P 500 index to rise just above 10% in 2005.