Tech companies drive S&P 500 companies' negative guidance for Q3
Heading into earnings season, an above-average number of S&P 500 companies have said third-quarter earnings will be down for the period, according to data from FactSet. Of 113 companies that announced guidance, 82 have said earnings will be lower, more than one-third of which are technology companies. So far, 29 tech companies have issued negative guidance, up from their five-year average of about 20. Health-care companies also saw a jump in lower earnings expectations, up to 15 from an average of 10.7.
The five-year quarterly average of negative guidance issuances was 74 as of Sept. 27. The high over that period was set in the first quarter of 2016 when 90 companies announced lower earnings. Despite the index gaining about 0.8% that quarter, it also spanned one of the worst starts to a year in its history. Last quarter got close to that mark with 88 companies.
Negative guidance, noted by FactSet in its report, is classified as a company's announcement ahead of its formal earnings release that its earnings will be below the consensus estimate.