Market Extra: Why a ‘very ugly reporting season’ for small-caps is bad news for stock-market bulls

Analysts earnings estimates for small-cap stocks for the first quarter and full-year 2019 have plummeted at a historic pace since the beginning of the year, with Wall Street now expecting constituents within the small-cap focused Russell 2000 index to enter an earnings recession in the first half of 2019.

The expected earnings recession, popularly defined as two straight quarters of negative earnings growth, threatens to compound the woes that have plagued small-cap stocks in the month of March and could also be a bearish indicator for the broader stock market, analysts and investors tell MarketWatch.

“What really concerns me is the performance of small and mid cap stocks,” Carlos Dominguez, chief investment officer at Element Pointe Advisors said in an interview.

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