The accompanying graph (see below) illustrates the trend in 2006 earnings estimates since July of last year. Estimates for the S&P 500 as a whole rose through November and then started to decline. But excluding Energy, estimates that had remained stable through last summer began to weaken in the fall and have started to decline at a faster rate more recently.

However, the fact that Wall Street gets its numbers wrong need not spell doom for the market. Even if negative estimates revisions were to continue apace, S&P 500 earnings would likely end the year up around 6%. That’s not as high as the 11.4% suggested by current consensus estimates, but still in-line with the post-WWII average of 6.2%.

Comments (0)

Comment	smaller | bigger
Name
Write the displayed characters
Subscribe via email (Registered users only) I have read and agree to the Terms of Usage.
	Add Comment