``We wouldn't be surprised to see a strong surge in the first month or two of this year as people play the hope game,'' said Joseph Williams
``Then reality will set in as far as what the earnings are going to be.''
Investors like Williams say that when companies start reporting fourth-quarter earnings later this month, the results may fall short of already lowered expectations.
Analysts say profit for companies in the Standard & Poor's 500 Index will drop 21.9 percent in the fourth quarter, the fourth consecutive quarter of falling earnings, according to Thomson Financial/First Call. On Dec. 1, the anticipated decline was 17.8 percent. They predict the profit slump will extend into this quarter with a 6 percent decline.
The gains may be short-lived once corporate profit reports reflect what analysts predict will be the worst quarter for earnings in a decade.
The pace of companies revising their outlooks is likely to increase the coming two weeks as managements determine the results of the final quarter of last year. About 60 percent of the S&P 500 will report fourth-quarter earnings in the next three weeks, First Call said.
Kurzfassung bei bloomberg...deutliche Warnung !
