Profit growth for U.S. companies probably accelerated for a third straight quarter as strengthening consumer demand drove sales for General Motors Co. to Apple Inc. and underpinned a manufacturing recovery.
Fourth-quarter earnings per share for companies in the Standard & Poor’s 500 Index rose 4.9 percent from a year earlier, according to analysts’ estimates compiled by Bloomberg, outpacing gains of 4.8 percent in the third quarter and 3.8 percent in the second. Estimates have trailed actual growth by at least 1.8 percentage points in the past three quarters.
High profit expectations for the quarter, coupled with last year’s outsized stock gains, may set up some companies for earnings disappointments that could send shares tumbling, said Matt McCormick, a money manager with Cincinnati-based Bahl & Gaynor Inc., which oversees about $10.5 billion.
McCormick pointed to shares of Facebook Inc., which doubled last year, and Twitter Inc., whose shares shot as high as $73.31 on Dec. 26 from its $26 debut in November.