Earnings for companies in the Standard & Poor's 500 continue to fall, with the biggest drag coming from financial and consumer discretionary...

Share story

Analysis |

Earnings for companies in the Standard & Poor’s 500 continue to fall, with the biggest drag coming from financial and consumer discretionary stocks. These sectors have been hit hard by the credit crunch and slow economy. With more than 90 percent of companies reporting for the second quarter, growth in operating earnings per share has been much worse than S&P analysts expected before companies started reporting. While there is stronger-than-expected growth among consumer staples, materials and industrials stocks, it hasn’t been enough to counteract slowing growth in the weaker sectors.

Sam Stovall, chief investment strategist at S&P, expects growth to increase in the third quarter, with double-digit gains for most sectors. Financials should still contract, analysts say, but at a far slower pace. Energy is expected to lead again, with 55 percent earnings growth. If this holds true, the recent low point for big-cap earnings would have come in the fourth quarter of 2007.