Coronavirus to knock U.S. earnings growth to zero, Goldman says

U.S. companies will post no earnings growth this year as the coronavirus outbreak becomes widespread, Goldman Sachs warned, as fears over the economic fallout from the epidemic have intensified.

The bank revised lower its baseline earnings per share estimate to US$165 this year, down from US$174 previously — representing no growth. By comparison consensus is for companies on S&P 500 in aggregate to post earnings growth of about 7.7 per cent this year, according to data provider FactSet.

“Our reduced forecasts reflect the severe decline in Chinese economic activity in 1Q, lower end-demand for U.S. exporters, supply chain disruption, a slowdown in U.S. economic activity, and elevated uncertainty,” David Kostin, U.S. equity strategist, said.

As of Thursday morning there were more than 82,000 confirmed cases of the coronavirus globally and more than 2,800 deaths, according to the World Health Organization.

The rapid international spread of the virus has reignited fears

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U.S. officials talk down coronavirus market panic, tout economic strength By Reuters

© Reuters. FILE PHOTO: A woman wearing a mask to prevent contracting the coronavirus reacts as employees from a disinfection service company sanitize a traditional market in Seoul

By Michelle Price

WASHINGTON (Reuters) – Senior officials in President Donald Trump’s administration on Sunday tried to calm market panic that the coronavirus could cause a global recession, saying the U.S. public had over-reacted and that stocks would rebound due to the American economy’s underlying strength.

The tumbled 11.5% last week as the virus accelerated beyond China’s borders, the worst weekly drop since the 2008 global financial crisis. Roughly $4 trillion has been wiped off the value of U.S. stocks.

The selling continued when resumed trading Sunday night, falling more than a 1%. But they later recouped initial losses on growing expectations that the U.S. Federal Reserve and other global central banks will take action soon to cushion the economic fallout from

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Fed ready to cut rates despite doubt they can fix virus fallout

The Federal Reserve is now prepared to reduce interest rates this month even though it recognizes monetary policy cannot completely shelter a U.S. economy increasingly threatened by the coronavirus. Fed Chairman Jerome Powell opened the door to a rate-cut at the Fed’s March 17-18 meeting by issuing a rare statement Friday pledging to “act as appropriate” to support the economy.

He was pushed into making that assurance by spectacular losses in U.S. stocks as investors turned fearful that the spreading virus would significantly damage the American and global economies. Traders and a string of Wall Street banks now expect the Fed to lower rates in the coming months, with some seeing the possibility of an emergency cut before the central bank’s March meeting.

In doubt though is how much effect rate cuts will actually have amid a health emergency that threatens to reduce both supply and demand in the economy. … Read More