Two weeks from today, aluminum maker Alcoa (NYSE:AA) will kick off the third-quarter earnings season—and analysts are already warning that it’s going to get rough out there. That’s because the earnings growth rate for companies in the S&P 500 are turning negative for the first time since the economic recovery began in 2009.
The takeaway here? This earnings season is going to be trickier than usual to navigate, and we’re already seeing the first signs that earnings will be dicey for some companies.
FedEx (NYSE:FDX) reported a 1% drop in profits despite an increase in shipping rates. Even worse, the delivery giant has cut its 2013 earnings guidance to a range of $6.20 to $6.60 per share—Wall Street forecast earnings of $7.04 per share.
Meanwhile, RBS Capital (NYSE:RBS) downgraded Intel (NASDAQ:INTC) on ongoing concerns about the PC market which could have an impact on INTC’s earnings.
I fully expect that when earnings start to come out in force, this is going to take many investors by surprise. This will create an environment where bad reports are punished and good reports are rewarded with fresh buying pressure.
And that’s going to be a boon for those fundamentally-strong companies that can continue their rapid pace of growth.