With 451 of the companies included in the S&P 500 index having reported quarterly earnings already, Standard & Poor’s Capital IQ unit reports that index growth is up 2.3% compared with the third quarter of 2011. By the historical average of 8.6%, that is very weak, but compared with an original estimate of 1.4% growth, it doesn’t look so bad.
Estimated growth for 2013 remains high, at 11.1%, with S&P expecting growth in all sectors except telecommunications (down 0.75%) and utilities (down 1.84%). IT (up nearly 50%) and financials (up 23%) are expected to lead the 2013 upward charge.
Hurricane Sandy, which might cost up to $50 billion in damage repair, had only a slight impact on financial stocks. The damage estimate is half that related to Hurricane Katrina in 2005, and insured losses are now estimated at $10 billion to $20 billion, compared with $60 billion following Katrina. Sandy’s biggest impact could come in new claims for unemployment benefits, and rebuilding efforts later this year and into next could actually stimulate the economy.
On the approaching fiscal cliff, S&P has this to say:
[W]e worry that inaction in Washington, D.C. to resolve the fiscal cliff, combined with the short term impact from Sandy, could produce an unanticipated exogenous shock to the fragile U.S. economy. … From our perspective, the outlook for next year’s earnings now depends on the need for bipartisan fiscal compromise in Washington D.C., and the hope that QE3 can provide a healthier fundamental backdrop for the U.S. housing market and broad economy, if not in the immediate future, then sometime in the early months of 2013.