With 39 S&P constituents reported so far, earnings are down over 14%. The pain is especially being felt in financials with earnings down over 30%. While earnings will probably end up better than early reports, the trend is clearly for slowing growth. Company profitability is getting squeezed by rising inflation, and multinational corporations will feel additional pressure from the strong dollar which is now at parity with the Euro.
During the JP Morgan earnings call, CEO Jamie Dimon stuck by his warning earlier this summer that a “hurricane” is headed for the economy. “I haven't changed my mind at all. The negatives I pointed out, the risks in the future, are still the same risks. They're nearer than they were before.”