In the U.S News and World Report online article, “Corporate Outlooks Worse than During Financial Crisis,” author Danielle Kurtzleben explains that the Thomson Reuters research company recently reported that almost a 5 to 1 ratio of the S&P 500 companies were reporting negative earnings guidance, which indicates either poor earnings projections due to real reasons, or pure pessimism. Kurtzleben also ponders if these reports may be from companies dialing back their goals, in order to exceed them at the end of the quarter.
My first inclination is that the latter is more of the culprit. Companies are “lowering the bar” so they can look like they’ve exceeded their expectations, and so economic reports will secure some semblance of investor confidence for their stock. It’s smart, but only if they all do it en masse, like we’re seeing here. This way, it will give the sense that the entire market is doing poorly, and the company HAD to lower expectations.
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