How The Coronavirus Recession Transformed The Future Of The S&P

Posted: Jun 02, 2020 1:48 PM
How The Coronavirus Recession Transformed The Future Of The S&P

Source: AP Photo/Richard Drew

Every three months, we take a snapshot of the expectations for future earnings in the S&P 500 (Index: SPX) at approximately the midpoint of the current quarter, shortly after most U.S. firms have announced their previous quarter's earnings.

The earnings outlook for the S&P 500 has dramatically decayed since our Winter 2020 snapshot, based on the data available as of 21 May 2020, trailing year earnings for all quarters in 2020 have plummeted from their previous projections just before the onset of the Coronavirus Recession.

To see the chart, click here.

We had been planning to reset the horizontal axis in the chart to start with December 2016 with this snapshot, but we left the earliest period in the chart at September 2014 so we could compare the magnitude of the previous major earnings recession with the Coronavirus Earnings Recession, which is already projected to be far deeper. Since we were occupied covering other breaking stories, we're also a bit late in presenting the Spring 2020 snapshot of expected future S&P 500 earnings, where the outlook thohas continued to decay further than what we've shown in the chart.

As the chart stands with the data that was available as of 21 May 2020, the Coronavirus Recession has monkeyhammered S&P 500's projected earnings through 2020. On 14 February 2020, S&P was projecting trailing year earnings of $161.22 per share for the S&P 500. On 21 May 2020, that projection has plummeted by nearly 42% to $93.88 per share.

Or if you pull the latest data through the end of May 2020, projected S&P 500 trailing year earnings have since fallen to $90.33 per share, or by nearly 44% from what S&P was projecting for 2020-Q4's trailing year earnings per share nearly three and a half months ago.

Data Source

Silverblatt, Howard. Standard & Poor. S&P 500 Earnings and Estimates. [Excel Spreadsheet]. 21 May 2020. Accessed 22 May 2020.