Profits at U.S. companies probably fell in back-to-back quarters for the first time in almost six years as financial firms led by Citigroup Inc. and Merrill Lynch & Co. lost billions of dollars and retailers suffered what may be the worst holiday shopping season since 2002.
Fourth-quarter earnings of Standard & Poor's 500 Index members may have dropped an average of 8.1 percent from a year earlier, according to data compiled by Bloomberg. Profits fell 2.5 percent in the third quarter.
Rising defaults forced financial institutions to announce about $100 billion in subprime mortgage losses last year, while the worst housing slump in 27 years and $3-a-gallon gasoline curtailed consumer buying during the Christmas shopping season. Retail sales growth in November and December may have been the slowest in five years.
``People are concerned about the economy,'' said Charles Rotblut, senior market analyst at Zachs Investment Research in Chicago. ``They're seeing a lot of foreclosures, rising oil prices, and they themselves are overly stretched.''
The last consecutive quarterly profit decline occurred in the six months ended in March 2002, as the U.S. was emerging from an eight-month recession that ended in November 2001. The drop in fourth-quarter earnings would be the first year-over- year decline for that period since 2001.
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