U.S. Profit Streak Hit By Global Weakness
Bid adieu to growing profits.</br></br>Slowing economies from the U.S. to China, increasingly wary shoppers, recession in much of Europe and a stronger dollar could bring to an end at least 10 continuous quarters of profit growth for America's biggest companies.</br></br>Until Friday, the outlook had been for further growth in earnings. But forecasts are now turning negative amid a number of profit warnings from companies like Starbucks Corp. and Illinois Tool Works Inc. In the third quarter, earnings by companies in the S&P 500 are expected to shrink for the first time since just after the recession ended, according to Thomson Reuters, which surveys Wall Street analysts.</br></br>And with that, one of the few bright spots of the struggling U.S. recovery gets dimmer. Strong earnings had been fueling corporate investment in technology and machinery, if not much hiring. Now, however, the pressure on profit is prompting firms including United Technologies Corp. and Dow Chemical to cut more costs.</br></br>Coffee chain Starbucks last week warned that customer traffic in U.S. cafes began slowing in June. The softness continued in July, so the company cut its earnings guidance for the third quarter. "This is not a Starbucks issue," said Howard Schultz, chief executive. "This is a macro problem of weak consumer confidence."