us companies are warning of earnings misses at a historically high rate and there are signs that the pace could accelerate but wall street analysts don’t seem to be listening too closely yet the downbeat outlooks for the current quarter as inflation and continued supplychain challenges lead to slowing demand muddied what has been a surprisingly clean firstquarter earnings reporting season with virtually all companies within the sp 500 index spx having reported quarterly results firstquarter earnings per share have increased 91 from a year ago well above consensus analyst expectations at the beginning of the quarter of 58 growth revenue rose by an evenbetter 136 up from initial forecasts for a 97 rise of the companies reporting results 77 have beat consensus eps estimates according to factset which is exactly in line with the quarterly average over the past five years but the magnitude of the earnings beats is 46 above consensus which is just a little more than half of the fiveyear average of 89 meanwhile 73 of the sp 500 companies beat revenue expectations by an average of 27 better than the fiveyear averages of 69 of the companies beating by 17 while that data reflects a relatively healthy first quarter for companies and their customers the guidance for the second quarter that many companies have provided suggests there was a surprise drop in demand and profit margins since the end of march as inflation and supply chain challenges have taken their toll on consumers particularly on lowerincome consumers and margins snap inc snap  although not an sp 500 component shocked investors last month when warned that it would miss secondquarter guidance provided just a month before because “the macroeconomic environment has deteriorated further and faster than anticipated” some other highlights of disappointing results and guidance came from companies that have fiscal first quarters that run through april such as target corp tgt and walmart inc wmt target actually cut its margin guidance twice in less than a month discount home essentials retailer big lots inc big highlighted the effects inflation was having on its customers saying sales trends “materially slowed” in april “we believe the slowdown was caused by the spending pressure our consumers felt from higher gas prices and broader inflation which is affecting discretionary spending across the retail industry” chief executive bruce thorn said it’s not all about inflation and the supply chain however as technology giants microsoft corp msft and salesforce inc crm warned about the negative effects of a strengthening us dollar which has been fueled by rising interest rates and geopolitical concerns read more about the effects of a strong dollar there have been 102 sp 500 companies that have issued eps guidance for the second quarter with 71 or 70 of those companies providing estimates below consensus which is well above the fiveyear average of 60 according to data provided by factset senior earnings analyst john butters that’s the most companies issuing negative guidance since the fourthquarter of 2019 or before the pandemic what should concern investors is that while wall street analysts have lowered their eps estimates for the june quarter in response to the negative guidance the cuts have been by much less than historical averages in addition analysts have actually increased estimates for the second half of the year analysts typically lower earnings estimates during the first two months of a quarter but eps estimates for the current quarter have decreased by just 12 despite all the profit warnings according to factset that’ s only half the average decrease of 24 over the past five years it’s even less than the 10year average decline of 33 and the average cut over the past 15 years of 47 and the latest data from factset’s butters shows that eps estimates have actually increased by 04 for the third quarter and by 02 for the fourth quarter that’s despite an indication that the pace of guidance cuts won’t slow anytime soon and may even accelerate wells fargo analyst ike boruchow said there’s no question that demand is slowing particularly among lowerincome consumers he noted that while revenue estimates have also come down they haven’t come down enough “the negative revision cycle has finally begun” boruchow wrote in a note to clients “fact is demand is slowing not accelerating and inventory dynamics are also worsening which leaves us concerned that more cuts are on the horizon” an example of the inventory dynamics boruchow refers to is what target is experiencing the company said lessthanexpected demand has led to excess inventory and it is planning several actions including additional markdowns to whittle down the excess that should lead to lower profit margins which translates to lower profits boruchow said history suggests that the negative revision cycle is only in the early innings “while it is certainly challenging to draw parallels to historical downturns in the macro the key point we make is that the prior two recessions saw negative revision cycles lasting 12 and 15 months with peaktotrough revenue revisions of 6 and 16” boruchow wrote “thus given we are just 12 months in and just 14 on revenue estimates thus far it’s easy to see why the market is clearly bracing for future risk to estimates” the sp 500 has dropped 139 since the end of the first quarter through friday which puts it on track for the worst quarterly performance since it tumbled 200 during the pandemicstricken firstquarter of 2020 and after falling 50 in the first quarter the index is headed for the first backtoback quarterly declines since the second down 02 and third quarters down 69 of 2015