International Business: US profit forecasts weaken as companies assess inflation risks – Gulf Digital News

International Business: US profit forecasts weaken as companies assess inflation risks – Gulf Digital News

NEW YORK: With first-quarter US earnings in the final stretch, corporate growth expectations for the current quarter and 2022 mostly are declining as costs surge for oil and other supplies and interest rates rise.

Sky-high oil has boosted forecasts for energy company earnings while feeding into concerns about profit margins for many other S&P 500 industries.

Disappointing outlooks from Amazon.com, Netflix and other major players have stood out among recent reports, even as the first quarter's estimated year-over-year profit growth has risen to 10.4% from 6.4% at the start of April, according to IBES data from Refinitiv.

Amazon.com delivered a disappointing quarter and outlook, saying it was swamped by higher costs to run its warehouses and deliver packages.

As of Friday, analysts had lowered their overall forecast for S&P 500 second-quarter profit growth to 5.6% from 6.8% at the start of April, while the full-year forecast has held at 8.8%, based on Refinitiv data.

The 2022 growth estimate, however, drops to about 5% without the energy sector's growth - a sizeable impact for a sector that accounts for just 4% of the S&P 500's market capitalisation.

"There will be more downside given the oil shock that we saw," said Ohsung Kwon, US equity strategist at BofA