Morgan Stanley says consensus estimates are currently forecasting a 5% decline in S&P 500 earnings per share for the second quarter. The firm notes that over the past three months, consensus estimates were lowered in seven of 10 Global Industry Classification Standard sectors, “led by discretionary and industrials.”
The firm said in its view that expectations have been lowered too much, and that reported results could show modest upside.
Earnings growth is expected to gradually improve in subsequent quarters.
Second-quarter earnings season kicks off on Wednesday when Alcoa announces results after the market closes.