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Merrill Revises S&P Earnings Projections

Financial firm Merrill Lynch & Co. is lowering its S&P 500 operating earnings per share estimate for 2006 to $74.55 from its earlier figure of $76.25.

The New York-based company earlier this month revised downward its inflation-adjusted GDP growth forecast for 2006 to 2.7% from 3.2%.

Noting the consensus earnings projection for next year is $82.50, about an 11% year-to-year gain, Merrill discounts that, stating "at no time in the past did earnings manage to post a double-digit increase the year after a [Federal Reserve] tightening cycle." Producers of industrial, tech and consumer-discretionary goods are "most vulnerable" to lower-than-forecast earnings, says Merrill.

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