Strong Third-quarter S&P 500 Profit Growth Overshadowed by Declining 2012 Earnings Expectations, says New Report

NEW YORK, Nov. 4, 2011 /PRNewswire/ -- In the most recent issue of the Lookout Report -- a biweekly research note from S&P Capital IQ's Global Market Intelligence unit that draws upon the firm's unique analytical assets, including Capital IQ, S&P Indices, S&P Leveraged Commentary and Data, and company and funds research -- analysts state that strong third-quarter S&P 500 profit growth is being overshadowed by declining 2012 earnings expectations. This research suggests that recently improving U.S. economic data and diminishing near-term recession risks are counterbalancing declining forward earnings expectations, but investors likely require sustained pro-growth news on the economy before optimism fully returns to the marketplace.

This information is published in the Lookout Report for November 4, 2011. The report, which also features market insights and commentary on corporate earnings, leveraged loan trends, commodity index activity and more is available here.

Following are additional highlights in this issue of the Lookout Report:

Economic And Market Outlook: Earnings In North America And Europe

Despite economic uncertainty, S&P 500 companies have continued their trend of strong corporate earnings this quarter. Meanwhile, corporate analysts continued to lower their earnings forecasts for European companies despite progress to resolve the debt crisis in the region

Leveraged Commentary And Data: After An Early Plunge, The High-Yield Market Reverses Sharply In October

The high-yield market saw two extremes in October, with a sharp sell-off at the beginning of the month and a broad and robust rally into the end of the month. Encouraging economic figures and positive news out of Europe--as leaders there worked toward an agreement to address the debt crisis--fueled the rally.

R2P Corporate Bond Monitor

On the fixed-income markets, risk-reward profiles--as measured by our average Risk-to-Price (R2P) scores--deteriorated in October, breaking the slowly improving trend in most of the sectors that began in September. Scores decreased across the board, except for the energy sector in the U.S. and the industrials sector in Europe.

Market Derived Signal Commentary: Challenges At Home And Abroad Pressure China's CDS

Compared with many sovereign spreads, China's spread remains relatively low risk. However, the trend over the past year, likely spurred by a combination of internal and external factors, makes us cautious. We think the CDS will continue to be subject to volatility in the near term.

Capital Market Commentary: Recent IPO Firms Are Posting Solid Earnings

The recent crop of IPO companies has delivered impressive earnings results. Among the 74 total (excluding closed-end funds and REITs) firms that went public this year, 23 have recently reported third-quarter 2011 results, according to S&P Capital IQ. Of those, 18 exceeded consensus earnings expectations.

S&P Index Commodity Commentary: Lower Rates And Non-Income Producing Assets

Following sharp declines in September, commodity prices have recovered along with other risk assets in the fourth quarter and are gaining additional support from sustained lower interest rates in the U.S., a surprise rate cut by the European Central Bank (ECB), and anticipated rate cuts in China.

The Lookout Report provides cross-market and cross-asset class views of current data and forward-looking insights from leading S&P market specialists.  Key areas of focus include aggregated corporate earnings, market and credit risk evaluation, capital markets activity, index investing and proprietary data and analytics.  The report previews the issues most likely to drive market expectations or cause a market disturbance in the weeks ahead.   It can be accessed on S&P.com, the S&P Global Credit Portal and Capital IQ.

About S&P Capital IQ

S&P Capital IQ, a brand of the McGraw-Hill Companies (NYSE:MHP), is a leading provider of multi-asset class data, research and analytics to institutional investors, investment advisors and wealth managers around the world. We provide a broad suite of capabilities designed to help track performance, generate alpha, identify new trading and investment ideas, and perform risk analysis and mitigation strategies. Through leading desktop solutions such as Capital IQ, Global Credit Portal and MarketScope Advisor desktops; enterprise solutions such as S&P Securities Evaluations, Global Data Solutions, and Compustat; and research offerings including Leveraged Commentary & Data, Global Market Intelligence, and company and funds research, S&P Capital IQ sharpens financial intelligence into the wisdom today's investors need.

SOURCE S&P Capital IQ