Investors were skittish the day before first-quarter earnings reports from major Wall Street banks were due to be released, as declining earnings expectations caused uncertainty across financial markets.
Currently, first-quarter earnings are expected to decline 4.2 percent year over year for S&P 500 companies, according to FactSet, which is slightly lower than the 3.9 percent decline predicted just one week before. If this prediction rings true, it would be the largest year-over-year decline in earnings since the first quarter of 2016.
How should investors react to this expected decline? Investing.com spoke with Delegate Advisors Co-Chief Investment Officer and Chief Compliance Officer Jim Powers to answer this question.
According to Powers, the primary focus for investors will be on companies’ guidance as it “will let us know what to expect, whether (potentially negative earnings) is a one-quarter blip or if we’re moving into an earnings recession.”