The volatility throughout the fourth quarter and December was enough to rattle the nerves of most investors. And a large sell-off right at the start of 2019 spooked investors further, at least before the Dow Jones industrial average posted a multiday recovery that took the index up about 1,250 points from its lows. While investors might have blamed machine trading and algorithms for the selling pressure in December, this was during a period when most people didn’t want to buy stocks. And it was a time when economic numbers and corporate news were looking less and less grand each week.

Now the investing community is preparing for waves of corporate earnings reports for the fourth quarter of 2018. Some companies are likely to post stellar earnings compared with the December quarter estimates, but where things are looking rather shaky is what to expect for guidance for the first quarter and for all of 2019. It is this guidance that should be of concern here, because at the current time most international corporations have every single reason to be cautious and conservative. They have no idea if trade talks will really result in a grand bargain with China, no idea if the partial government shutdown will get resolved, no clue if Federal Reserve Chair Powell really will slow down on the rate hike game, and no idea if the economic picture will improve.

24/7 Wall St. has warned that the analyst community had not dialed down expectations enough for the current climate. This also means that the investing community was not dialed in enough with reality, even after the major volatility made for the worst December since the Great Depression of the 1930s. At the start of 2019, the model we use for tracking analyst forecasts was pointing to Dow 28,000 in 2019. That felt ludicrous considering the Dow was closer to 23,000. Wall Street analysts also were being more than complacent in how they rate each other with price targets that were in many cases way too high with 40% and 50% in implied upside.

Even as the markets had recovered handily in January, there are growing concerns from investors, analysts, economists and corporate managers that are sounding certain alarms ahead of the earnings onslaught that will start in just a few days time. There are also big issues that are company-specific and could add up to enough added pressure when all combined: Johnson & Johnson and talc-asbestos, PG&E bankruptcy woes, Sears going kaput, J.C. Penney closing yet more stores, Samsung guiding lower and so on.

Before we get into which earnings warnings are weighing on investor ambitions in 2019, note that CFRA (S&P Global) already has warned that fourth-quarter earnings will be the first quarter that growth begins to taper off after three consecutive quarters of 20% growth, and the firm notes that investors likely will focus on corporate outlooks, as guidance among S&P 500 companies has been more negative than positive. The firm expects results to be better than expectations but also expects more downward revisions to come as the earnings period unfolds.

American Airlines Group Inc. (NASDAQ: AAL) lowered its 2018 earnings forecast on January 10 as fourth-quarter domestic performance was short of expectations. This is the world’s largest airline carrier by annual sales, and the new adjusted earnings per share range of $4.40 to $4.60 was down from a prior forecast of $4.50 to $5.00. American Air’s total revenue per available seat mile also was forecast to be up roughly 1.5%, versus a prior forecast of 1.5% to 3.5%. Further confirmation for airline worries came from Delta Air Lines Inc. (NYSE: DAL), which said that its own airfare revenues were not as high as expected during the key holiday season.

Apple Inc. (NASDAQ: AAPL) had been touted by analysts as having weak iPhone sales before the holidays, but after the first trading day of 2019, Tim Cook dropped the bomb in a rare warning signaling that things were even worse than analysts had forecast. Instead of only seeing firms cutting price target and maintaining “Buy” ratings, there were actual downgrades this time around. While Apple’s woes look tied to iPhone worries and China growth slowing, the reality is that the Apple ecosystem of technology suppliers has in many cases been feeling the heat as well. If Wall Street is only willing to value Apple at less than 12 times expected 2019 earnings, that is not a ringing endorsement for the technology sector as a whole, considering that Apple had been the first company to ever reach the $1 trillion valuation mark before sliding in 2018.

Conagra Brands Inc. (NYSE: CAG) punished its shareholders right before Christmas as well. Despite beating its past profit expectations with earnings, the problem was that sales growth was a tad light on expectations, causing a big drop in earnings after items. To make matters worse, the food giant dialed down its 2019 guidance to a range of $2.03 to $2.08 in earnings per share (below a consensus estimate of $2.12) and its shares dropped from $29 to about $21 with disappointing news around its acquisition of Pinnacle Foods not living up to expectations.

Constellation Brands Inc. (NYSE: STZ) is proving that beer and booze aren’t as defensive as they used to be. The guidance of earnings in a range of $9.20 to $9.30 per share for the year ahead was lower than the $9.43 consensus estimate. This also marked the second dive after earnings for Constellation, and the company talked down case volume expectations and even took a write-down on the value of its large cannabis investment into Canopy Growth.

FedEx Corp. (NYSE: FDX) dropped the ball on the transportation sector just a few days ahead of Christmas, and that was after already underperforming in 2018. The parcel shipping giant blamed current trade policies and the market totally ignored that it had beaten earnings expectations for its most recent quarter. FedEx lowered its 2019 earnings guidance to $15.50 to $16.60 in per share, down from a prior range of $17.20 to $17.80 and lower than a consensus estimate of $17.32 per share at the time. FedEx’s guidance assumed moderate domestic growth and no further weakening of international economic conditions.

Macy’s Inc. (NYSE: M) lost almost 20% of its value on January 10 after the mall-based department store giant put its fiscal 2019 earnings guidance in a range of $3.95 to $4.10 per share, compared with $4.10 to $4.30 just two months earlier. That may only be a 5% or so change, but it indicates point-blank that Macy’s failed to deliver strong numbers during the holiday retail flurry. That’s also with the most number of days between Thanksgiving and Christmas that retailers can possibly have. Macy’s even guided margins down slightly and its general expenses (SG&A) were up slightly rather than flat.

Micron Technology Inc. (NASDAQ: MU) delivered another shelling to its shareholders in December when the DRAM and flash memory giant reduced plans for increased memory production and provided a quarterly forecast that was much lower than expectations. On the firm’s conference call, CEO Sanjay Mehrotra reduced stated plans to increase production of both NAND and DRAM memory, admitting that increased supply would have outpaced wakening demand. However, he expects demand to pick back up in the second half of 2019. Micron’s guidance took its second-quarter earnings per share down to a range of $1.65 to $1.85 and revenue to between $5.7 billion and $6.3 billion. At that time, analysts had called for $2.44 per share and $7.34 billion, respectively.

Under Armour Inc. (NYSE: UAA) was supposed to be deep into a turnaround, with its shares having previously doubled from their lows in the past year. When the company’s earnings were in line, the guidance for 2019 included flat gross margins. The sporting apparel maker also outlined a forecast for its expectations and plans out to 2023, with gross margins of close to 50%, $700 million in annual cash flow, and its return on invested capital to reach 20%. Its shares fell from almost $21 to almost $15 before its recovery after Christmas. Under Armour may not seem statistically relevant enough with an $8 billion market value, but this is one of the high-flyers of yesteryear and it dashed the hopes of many turnaround investors to the point that they muted some apparel expectations for the “athleisure” trend as a whole.

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