BANK OF AMERICA: These 5 trends emerged from companies' first-quarter earnings reports

Non-financial net margins sank to their lowest since the start of 2017 through the first quarter, the team led by Savita Subramanian said. The consumer discretionary, energy, and industrial sectors posted the bulk of corporate profit slippage through the period, and a bumpy return to past activity could prolong a rebound for the crucial metric.

Bank of America's Corporate Misery Indicator also flashed a dire signal over the quarter, hinting at both a macro and micro hit to companies' margin expansion efforts.

While the virus-fueled sell-offs through February and March dragged on nearly all stocks, the pandemic's fallout was relatively crowded in a few corners of the market. Major misses in the financial and discretionary sectors tanked related equities, but seven out of 11 sectors generally bested estimates through the quarter, Bank of America said.

The trend has continued into the current quarter, with certain industries quickly returning to past highs. Tech, in particular, has thrived as investors bet on such firms to ride out the pandemic.

Companies generally shifted from generous stock buybacks and dividend programs to conserving cash where needed. About one-fifth of firms suspended buybacks, and 10% of companies either ended or slashed dividend payments, the team wrote. The bank's capital expenditure guidance ratio sits at its lowest since the financial crisis, suggesting firms will prioritize liquidity over shareholder benefits until the economy rebounds and credit stresses abate.

One-third of companies pulled their forward guidance last quarter as the coronavirus' path remained extremely murky. Hopeful language on earnings calls tumbled to the weakest level in Bank of America's data history, further emphasizing uncertainty among corporate leadership.

Those suspending their forecasts didn't enjoy much empathy from investors. Only 21% of such firms beat earnings estimates in the first quarter compared to 33% for companies keeping their guidance. Apple stood out as a prime example, with its lack of next-quarter guidance overshadowing a surprise increase in revenue through the start of the year. The iPhone maker's shares dipped as much as 2.4% in the following session.

Even as top economists and government officials warn of a turbulent recovery, analysts still forecast a V-shaped upswing. Wall Street's consensus projects S&P 500 earnings per share returning to past high of $161 in 2021, but Bank of America is decidedly less optimistic.

The team of strategists expects a more severe profit slump, with per-share earnings diving 29% before recovering over a longer period of time. The metric will only land between $145 and $155 in 2021 and not return to past highs until the following year, they added. The market rebound could face stronger volatility if such a projection materializes and analysts' lofty estimates are revised lower.

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