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News > Companies
2Q nears record for pain
July 24, 2001: 2:12 p.m. ET

The April-June quarter was bad, and relief may not come until 2002
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NEW YORK (CNNfn) - It's just about official: The second quarter was Corporate America's worst period for profits in a decade.

With more than half the companies in the Standard & Poor's 500 index, or 290 firms, having released April-June results through Tuesday morning, earnings are down, on average, by 20.4 percent, according to earnings tracker First Call. That drop likely will mark the weakest performance since the second quarter of 1991, when profits tumbled 24.2 percent and the country was emerging from a recession.

A slowdown in business spending, a strong dollar and rising energy prices took their toll on the 830 companies that warned second-quarter results would fall short.

But now, the 170 S&P 500 companies that have beat Wall Street's low expectations have done so by a smaller-than-average margin of 1 percent.

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"That's 2.1 percentage points below the norm that we've seen," First Call's Ken Perkins said.

Rounding out the second-quarter numbers among S&P companies, 81 firms met forecasts while 39 fell short.

Looking ahead, 134 companies already have announced shortfalls for the third quarter, which began this month, delaying investors' hopes for a second-half recovery.

CNNfn.com's second-quarter earnings scorecard

And profits, which fell 6.1 percent in the first quarter, are expected to drop another 9.9 percent in the July-September quarter. Analysts surveyed by First Call don't see a gain until the final three month of the year, when earnings are expected to rise 2.2 percent.

Lower rates could spur a turnaround. Many economists expect the Federal Reserve, which cut interest rates six times this year, will do so again next month, cheapening borrowing costs.

Next year looks better. That's when profits, aided by easier year-to-year comparisons, are seen gaining 19.4 percent.

Not surprisingly, the second quarter's laggards are technology firms, whose earnings on average slid 60 percent, First Call said. Last week, Intel (INTC: Research, Estimates), the No. 1 chip maker, said its quarterly earnings tumbled 76 percent.

First Call Earnings Calendar

No wonder the tech-heavy Nasdaq composite index fell 19.5 percent year-to-date through Monday's close.

But energy companies, the best performers with a 23 percent year-to-year gain, have benefited from rising fuel prices. Exxon Mobil (XOM: Research, Estimates), the No. 1 U.S. oil company, said earnings rose to $4.38 billion, or 64 cents a diluted share, from $4.15 billion, or 60 cents a share, a year earlier. graphic

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.