"NEW YORK — For almost three years, no matter what has rattled the financial markets — a debt crisis in Europe, high gasoline prices, a slower economy — investors have been soothed by rising corporate profits.
The storyline became as predictable as a soap opera's. But when the latest round of corporate earnings starts rolling in this week, look for a twist: Profits are expected to fall.
"China is still slowing. Manufacturing numbers in the U.S. are weak," says Christine Short, senior manager at Standard & Poor's Global Markets Intelligence. "You can only have so many things working against you."
Stock analysts expect earnings for companies in the Standard & Poor's 500 index to decline 1 percent for April through June compared with the year before, according to S&P Capital IQ, the research arm of S&P.
That would break a streak of 10 quarters of gains that started in the final quarter of 2009.
Over recent weeks, a motley collection of chain stores, steel producers and technology titans have warned of slowing profits. They all point to similar culprits — flagging sales to Europe and slower economic growth in China.
"You've seen the evidence," says Adam Parker, chief U.S. equity strategist at Morgan Stanley, the investment bank. "A ton of companies have already told you the economy is slowing."
The list of companies that have warned of trouble is long and varied, and includes well-known names such as Procter & Gamble, Ford, Nike, McDonald's, Cisco, Starbucks and Tiffany."