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Earnings and sales growth expected to slow in 2019

After three years of upward momentum, both earnings and sales growth are expected to decline in 2019, according to data collected by FactSet. Earnings are expected to grow at a rate of 7.9%, down from 2018's 20.3%, including fourth-quarter estimates, and sales are expected to grow 5.3% over the year, down from 8.9% growth in 2018, with Q4 estimates included.

Industrials are expected to see the most earnings growth in 2019 at 11.4%, followed by consumer discretionary companies at 9.8%. Real estate and consumer staples have the lowest growth estimates across the 11 sectors with 3.9% and 4.3%, respectively. Communications and health care are targeted to have the highest revenue growth with 10.5% and 7.8%, respectively. Financial firms' revenue is projected to grow only 2.9% during the year.

Foreign-exchange rates and rising costs are expected to have a significant negative impact across all corners of the market. FactSet noted the effect of the strengthening dollar on estimates comparing companies with more than half of their sales inside the U.S. to those with less than half: Earnings and revenue growth was 1.5 and 0.9 percentage points higher, respectively, for the former.