Expected Second Quarter Earnings Growth

This week is somewhat of a practice round for second quarter earnings season that really kicks off in early July.  Along with FedEx (FDX), which reports on Wednesday, Morgan Stanley (MS) and Goldman Sachs (GS) report their numbers this week.  Since earnings season is almost upon us, we thought we'd highlight the current growth expectations for the S&P 500 and its ten sectors.  In the first chart below, we highlight year-over-year growth expectations for the S&P 500 in Q2 '08.  At the start of the year, estimates were actually positive at 3.2%, but they have steadily drifted lower and currently stand at -7.7%.

The bottom chart looks at current Q2 growth estimates for the ten S&P 500 sectors.  Once again, Financials and Consumer Discretionary are the main cause for the negative overall number.  As shown, Financial earnings are expected to be down nearly 46% from the second quarter of last year.  Consumer Discretionary ranks second worst at -19%.  On the positive side, Energy is not surprisingly expected to see the strongest growth at 20.5%.  Energy is followed by Technology at 12%, Consumer Staples at 8.6%, and Health Care at 5.9%.