Investors expecting 2014 to kick off with bumper profit growth to match a rally in stock markets could be disappointed, with analysts telling CNBC that a raft of global risks are hitting optimism.
Along with the U.S., European bourses have been cautious this week ahead of corporate earnings.
Earnings for the S&P 500 are expected to grow by just 1.1 percent this quarter, and revenues are expected to rise 2.7 percent, according to Thomson Reuters. In Europe, earnings momentum – a ratio that calculates whether corporate earnings per share is accelerating or decelerating - has been showing a slowdown since late January, according to Reuters. Data last week showed the ratio had slipped from -2.9 percent two months ago to -4.6 percent.
"We are entering earnings season cautious," Gemma Godfrey, the head of investment strategy at Brooks Macdonald, told CNBC via email.
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Indeed, high-profile investors like Dennis Gartman have ventured onto the sidelines, opting to hold cash, until a firmer earnings trend plays out in the next few weeks.
Profit growth is seen as a vital next step to drive stocks higher and, in some cases, justify current valuations in some sectors. So-called momentum stocks, including high-profile names in the technology sector, have seen heavy selling in recent days, as investors have started to question recent run-ups in price.
The S&P 500's current price-to-earnings ratio - an important equity valuation gauge used by investors - stands at 17.67. This compares to figures of below 10 following the global financial crash of 2008. In Europe, the ratio for the pan-European Euro Stoxx 600 Index sits at 16.06.
"From a (price-to-earnings) perspective, overall European equities are trading at levels that are higher than in previous years and so there's a feeling that finding value is hard to come by," Angus Campbell, a market strategist at FxPro, told CNBC via email.