Analysts Cut S&P 500 Profit Outlook

Now, money managers at Stifel Nicolaus & Co. and USAA Investment Management Co. are preparing for weaker returns in October as Alcoa Inc.’s Oct. 7 report starts the third-quarter earnings season. But Bloomberg notes that even with the decline in analyst estimates, bullish analysts say equities remain cheaper based on forecast profits than at any time since 1988, excluding the six months after Lehman Brothers Holdings Inc.’s bankruptcy in 2008.

“Earnings forecasts are going to be somewhat more muted in their expectations for future growth,” Chad Morganlander, a Florham Park, N.J.-based money manager at Stifel Nicolaus, told Bloomberg. “It’s not necessarily a bad thing, but it’s certainly not the fuel that will reignite animal spirits.”