Earnings good news
by Peter Switzer
On a day when the Dow lost 0.38 per cent and the S&P 500 dropped close to 0.7 per cent and Boeing reported worse than expected, the following could prove to be a good tonic.
Around 82 per cent of US companies that have reported have topped expectations and while there have been reservations about the revenue showing of companies some 68 per cent delivered better revenue results than the experts tipped.
That was one summary, while Thomson Reuters says with around half of the S&P 500 companies reporting, 77 per cent have beaten analysts’ forecasts.
Sure, it doesn’t help that the Fed’s Beige Book indicated a weaker than thought recovery but note that the central bank is talking “recovery” and not double-dip recession.
What’s going on, as I predicted yesterday, is after the market runs up, once a bit of resistance happens the profit takers do exactly that — they take profit and shares sink a bit.
The news overnight
The market also was not helped by that pest Moody's, which downgraded Bank of America, Citigroup, and Wells Fargo because of less government support and more regulations.
Other negatives included a small fall in durable goods orders and weaker investor confidence from one survey but all of this is to be expected given the recent challenges markets and economies have been facing.
As I have consistently argued, good news such as the earnings results stacks up better than bad news — the slight softening of the US economy — and it keeps me a buyer of good value stocks that I want to hold for a long time.
A recent New York Times article citing the work of two top economists — Alan Blinder of Princeton and Mark Zandi — argued that the stimulus measures and the financial bailouts averted a Great Depression Mk II and if this had happened many of you might not be reading this story today and in fact, I might not be writing it! Though I doubt the latter suggestion given my passion for commentary.
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Published on: Thursday, July 29, 2010blog comments powered by Disqus