Wall Street braced for second quarter declarations

7 July 2008

Further credit crunch-related asset writedowns are expected to hit firms' profits in earnings declarations for the second quarter, which begin later this week.

More generally, profits are expected to be well down on April-June 2007, due to the continuing global financial crisis.

The decline in the banking sector is expected to be particularly marked: while financial stocks contributed over $60 million to the Standard & Poor's index over the second quarter last year, the figure is expected to stand at just $24.6 billion this year.

In total, banks have written off over $300 billion due to the crunch - with that number to be added to in the upcoming three-month declarations.

Howard Silverblatt, Standard & Poor's senior index analyst, commented: "The earnings, which are a reflection of the economy in general, have been going down and unfortunately there's a lot of concern it will go down a lot more."

He added: "How long can they continue through the storm? Nobody believes the 'worst is behind us' comments from the CEOs because they can't predict where this economy is going."

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