The percentage of US companies failing to meet Wall Street’s earnings expectations has reached the highest level in more than two years, fuelling fears that corporate America’s record run of profit growth will come to an abrupt end. Concerns of a slowdown in corporate profitability – one of the key reasons for the stock market’s record-breaking streak – have been heightened by companies’ increasingly bearish outlook on business prospects. More than 22 per cent of the 400-plus S&P 500 companies to have reported results for the fourth quarter of 2006 failed to meet Wall Street expectations. This is the highest level of ‘misses’ since the third quarter of 2004, according to Reuters Estimates. The spike in earnings disappointments increases the chances that corporate America will end a three-and-a-half year run of quarterly double-digit profit growth in the last quarter of 2006 rather than at the beginning of 2007, as widely expected. Missing earnings forecasts is particularly embarrassing for US companies because, unlike most of their European counterparts, many set their own yardsticks by providing analysts with quarterly earnings guidance. ‘The period of rapid earning growth is at an end,’ said Ashwani Kaul, senior research analyst […]