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Lowest Earnings Growth in 3 Years for S&P 500 Firms?

Matt Clinch, special to CNBC.com
Tuesday, 10 Jul 2012 | 1:46 AM ET

Second quarter earnings data released in the U.S. is set to disappoint investors, John Butters, Senior Earnings Analyst at FactSet told CNBC.

Earnings Growth Dominated by Bank of America: Pro
"We are not seeing an outright decline in earnings, we are actually expecting growth of 3 percent, however this would be the lowest growth we have seen in about three years and it is also important to note that most of this growth is coming from just one company Bank of America," John Butters, senior earnings analyst at FactSet, told CNBC.

Butters estimates earnings for S&P 500 companies to grow by 3 percent, which would be the lowest growth in three years. In addition, most of that growth will come from one company, Bank of America .

“They’re having an unusually large contribution to the overall growth rate. If we exclude Bank of America, that 3 percent expected growth for the index drops down to a decline of 2 percent.” He said.

It was a similar story with the technology sector. Apple is set to be the largest contributor to growth and Butters cited the impact of weakness in Europe and in the emerging markets.

“Overall for tech we’re looking at about 3 percent growth as well, but if you remove Apple, that growth rate drops down to a decline of 2.5 percent.” He said.

One trend that he noted in the latest estimates is that seven of the ten sectors in the index are projected to report higher revenue growth than earnings growth for the quarter. This is usually attributed to high commodity costs, but due to a fall in prices Butters sees other factors as being responsible such as marketing and labor costs.

“One example of that would be Nike , where they had 14 percent growth in revenues but a 6 percent decline in earnings. Again, they cited increased SG&A (Selling, General and AdministrativeExpenses) costs” He said. “So companies are certainly seeing some increased costs coming into the second quarter.”

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