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Q1 Earnings Forecast Goes Negative

Here we go again.

Analysts now expect earnings to decline in the first quarter of 2008.

Today, Thomson Financial's earnings growth consensus for the S&P 500 fell to -0.1 percent.

On Jan. 1, analysts expected growth of 5.7 percent On Oct. 1, it was 10.6 percent.

The main drag on earnings continues to be the financial sector.

Forecasts are for a 23 percent decline in financials' profits. On Jan. 1 consensus was an 11 percent decline and on Oct. 1 analysts called for a 5 percent increase.

Excluding financials, the growth forecast jumps to +9.0 percent.

However, other sectors are softening as well. Consumer discretionaries are also expected to decline 4 percent, a big drop from +8 percent consensus on Jan. 1 and a +18 percent forecast on Oct. 1.

Profits in the materials sector is also expected to fall by 3% versus a forecast of 7 percent increase on Jan.1 and 9 percent increase on Oct. 1.

Here's the sector-by-sector breakdown:

Source: Thomson Financial

The market has hit the Financial Sector the most in the past three months. Leading the Financials to the downside in the past 3 months are:

  • MBIA down 67%
  • Ambac Financial down 64%
  • Sallie Mae down 45%
  • MGIC Investment Corp down 44%
  • Countrywide Financial down 35%