Earnings forecasts for technology companies and banks have been sharply cut, pointing towards a muted earnings season and the possibility of the stock markets also remaining subdued due to it.
Forecasts for techs and financial have been scaled down by more than 10 percent by analysts for the quarter ending in December, reports said.
The benchmark S&P 500 index is heavily weighted by techs and financial stocks. Analysts are also pessimistic about companies in the materials sector but not as much as the others.
For technology companies the main concern is the fall in sales of personal computers and other traditional computing devices, which is giving way to smartphones and tablets.
This has an effect not on the makers of such devices but also in makers of microprocessors, which derives its demand from them.
For financial firms it is a long haul struggling as they are against a decline in the brokerage business - brokerage fees have dipped sharply - while they are trying to get capital funds.
Some analysts however expect the companies to find other ways to bounce back and boost earnings. Intel, for instance, is has already set its sights on the mobile space with its new range of Atom processors for mobile devices.
Among financials the major earnings next week is that of Wells Fargo, and it is expected to report earnings of 89 cents a share, about a penny higher than what was expected about a quarter earlier.
Analysts are expecting fourth quarter earnings to be better than the third quarter. The fourth-quarter operating earnings estimate for the S&P 500 has fallen to $25.29 a share from $26.87 a share over the past three months. That’s an expected 6.6% improvement from the year-ago quarter’s operating earnings of $23.73 a share rather than a 13.2% one.