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Apple CEO Tim Cook
- Apple and Micron's results are having an outsized impact on earnings growth this season, according to a report from Goldman Sachs.
- The companies represent the largest drags on S&P 500's earnings-per-share growth this year, the firm's equity strategists said.
- Watch Apple and Micron trade live and follow along with our earnings calendar here.
The S&P 500 may have seen robust growth this earnings season if a couple of stand-out names hadn't skewed the big picture.
That's what Goldman Sachs strategists told clients in a report describing the state of earnings season, with the majority of results in the books. The firm pinpointed which names have had the biggest negative impacts on earnings total growth: iPhone giant Apple and chipmaker Micron.
Together, the two tech companies accounted for a 20% drag on the S&P 500's full-year expected earnings growth of 4%, according to the firm's analysis in a report dated February 15. While Micron had a -13% impact on the firm's full-year S&P earnings outlook of 4%, Apple had a -7% impact.
Read more: The most disappointing earnings season in years has turned into a 'minefield'
It likely comes as no surprise to those tracking Apple's results that the iPhone maker ws among the biggest drags on the market's aggregate growth.
Apple told investors well in advance of its quarterly earnings report that it would fall short of prior revenue guidance, due mostly to iPhone weakness in Greater China. Still, with analysts and shareholders already apprised of the company's expectations, the results last month were viewed as better than feared.
Semiconductor manufacturer Micron, meanwhile, reported quarterly earnings in mid-December that fell short of analysts' expectations. The company also lowered its capital-expenditure guidance, and cited an oversupply in the memory-chip market.
More broadly, investors are worried about the prospect of an earnings recession, the report said, but Goldman's strategists are less concerned.
"We expect weak profit growth will be short-lived, and should improve in the back half of 2019," the strategists led by David Kostin said, adding that the market has already priced in a slowdown in earnings growth and that "revisions have troughed."
JPMorgan and Amazon topped the firm's list of most positive contributors to earnings growth, with both individually adding 6% to the S&P 500's earnings-growth outlook for full-year 2019.
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