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Which U.S. sectors will report the best earnings?

Frank Gunn/THE CANADIAN PRESS

Globe editors have posted this research report with permission of S&P Capital IQ. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following is excerpted from the report:

In its most recent report, Capital IQ indicated that guidance for Q4 2013 earnings had been provided by 100 companies. Of those, 80 were negative, 10 were positive and 10 in line with expectations. This produces a negative-to-positive ratio of 8.0, higher than the 15-year average, offering an inauspicious glimpse of the earnings reporting period to come. Specifically, the S&P 500 is seen growing EPS by 5.7% in Q4 2013 over Q4 2012, on par with Q3 2013 growth. Eight sectors are expected to report year-over-year increases led by Financials, Industrials, and Telecom Services, with Energy and Utilities recording the only declines. From a revenue perspective, Q4 is expected to maintain its upward bias, advancing 2.6%, but will likely take a step backwards from the 4.2% gain seen in Q3. Seven of 10 sectors should report top-line growth, led by Consumer Discretionary, Health Care and Industrials. The revenue declines are projected to come from Information Technology, Telecom Services, and Utilities sectors.

What will likely be the drivers of this quarter's results? The following are projections by S&P Capital IQ equity research sector group heads as to the likely factors that affected EPS growth in the fourth quarter. Common headwinds include a pickup in interest rates, a strengthening in the value of the U.S. dollar, and the government shutdown early in the quarter. However, tailwinds included a variety of general readings on the U.S. economy, such as the stronger-than-expected increase in Q3 GDP.

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