S&P 500 firms set to see first ever Q4 negative earnings

NEW YORK: The companies in the American benchmark S&P 500 index are expected to witness their first ever decline in earnings, primarily in the wake of rising layoffs and massive write-downs triggered by the financial turmoil.

According to S&P, the "reported earnings" of the constituents in the index are set to decline in the fourth quarter ending December.

With 71.5 per cent of the members posting their "reporting earnings" in deep red, Standard & Poor's Index Services' anticipates that the S&P 500 companies will post its first ever fourth-quarter negative earnings.

"Impairment, layoffs, write-downs and related things are the main reasons for the gloomy forecast," Standard & Poor's senior index analyst Howard Silverblatt said in an e-mailed statement.

The Standard & Poor's Index Services' recent report noted that so far, the constituent entities have registered a fall of about 10.8 per cent in fourth quarter sales.

However, the report said that operating income of the S&P 500 companies would remain "positive" in the fourth quarter, if the unusual charges are not included.

Expenses related to layoffs and write-downs, among others, fall under unusual charges.