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More Selloffs to Come if Revenue Doesn't Improve: S&P's Stovall

Most companies have been reporting earnings that beat Wall Street expectations. Will the trend continue throughout the season in this first big earnings week? Sam Stovall, chief investment strategist at Standard & Poor’s, shared his earnings outlook.

“The economically sensitive sectors are expected to see good earnings increases,” Stovall told CNBC.

“So far, about 15 percent of the companies in the S&P 500 have reported earnings and about 60 percent of these companies have beaten estimates—and they’ve beaten quite dramatically."

However, Stovall said most companies are expected to report lower revenue numbers than expected.

“And that’s where most analysts are going to be forecasting on their guidance,” he said. “At best, revenue will be mid- to single-digits area whereas earnings are up 40 percent plus, mainly because we’re seeing companies are doing a lot of cost-cutting.”

“So in general, if we don’t see a better revenue picture, we can see more days like Friday,” he warned.

Scorecard—What He Said:

  • Stovall's Previous Appearance on CNBC (Jul. 13, 2010)

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Disclosures:

No immediate information was available for Stovall or his firm.

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