S&P’s yield rate reflects slow growth

NEW YORK – After nearly four years of stratospheric profit growth for Standard & Poor’s 500 companies, investors are about to see earnings come back down to earth.

Hundreds of other U.S. companies are scheduled to issue their quarterly reports in the coming days. This will be the first time in 19 quarters that companies within S&P’s flagship index won’t even come close to reaching double-digit profit growth.

Earnings growth for the first three months of the year is expected to slump to 3.8 percent, and likely grow 6.7 percent for the year, according to Thomson Financial. That’s down from 8.9 percent growth in the fourth quarter, when companies barely missed the double-digit mark.

Companies have benefited in the past few years from relatively low interest rates that have kept business thriving and allowed companies to stow away record cash stockpiles.

But a slide in the housing market has had a ripple effect through the consumer discretionary sector. What might have started out with homebuilders has spilled over to other industries, such as the automotive and retail industries. Wall Street has been struggling with signs of a weaker economy even before earnings reports are released. On Friday, investors were disappointed by a University of Michigan’s consumer sentiment index that came in below expectations.