Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

World Hurting U.S. Revenues, But U.S. Economy Holding up Earnings

Thursday, November 1st, 2012
By for Profit Confidential

U.S. EconomyThere are still a lot of earnings reports hitting the wires, and there’s a trend in the numbers. The global economy is dragging down U.S. business conditions, which are actually showing improvement. The stock market is down, but it’s not out yet.

Currently, shares in Apple Inc. (NASDAQ/AAPL) are leading the stock market lower. Shares in Amazon.com, Inc. (NASDAQ/AMZN) and Google Inc. (NASDAQ/GOOG) are down a solid 10% from their highs. Without upward price momentum from these market leaders, the broader stock market is going nowhere.

I still think the stock market is headed lower over the near term, but that it might bottom out around 1,350 on the S&P 500 Index. What third-quarter earnings season has shown is that companies with large overseas operations are hurting relatively stable earnings results from U.S. operations. NIKE, Inc. (NYSE/NKE) represents this trend both operationally and on the stock market. The company’s stock chart is below:

Nike Inc Chart

 Chart courtesy of www.StockCharts.com

From what I’m reading, large-cap companies are reporting stability and even some growth in their U.S. operations. Colgate-Palmolive Company (NYSE/CL) has shown strong resilience in its earnings reports, but like many other multinational companies, operations in Europe are hurting the bottom line. Colgate-Palmolive’s stock chart is below:

Colgate-Palmolive Co Chart

Chart courtesy of www.StockCharts.com

So, while the stock market is right at the point of breaking its 100-day moving average (MA), expectations for fourth-quarter earnings are minute, but not in decline. With stability in the eurozone and China, a recovering U.S. economy has the potential for fourth-quarter earnings to surprise to the upside.

  • Since the beginning of July through to Friday, the small-cap Russell 2000 Index has tumbled 8%.

    Historically, the Russell 2000 has led the general market lower.

    THE BUBBLE HAS STARTED TO BURST

    A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

    We are predicting this crash will be more devastating than the 1929 crash—the ramifications of which will hit Americans deeper than anything we've ever seen.

    To see proof of why this stock market is headed for a crash and what you need to do to protect yourself (and even profit from it), watch our new warning video here now.

Investor sentiment isn’t that great right now, and third-quarter earnings season will soon be at an end. But there is an underlying strength to U.S. corporate earnings that you can garner from large-cap companies; the resiliency is coming from the U.S. economy. There are a lot of headwinds to be dealt with over the next six months, but according to the earnings results, the sky isn’t falling quite yet.

VN:F [1.9.22_1171]
Rating: 0.0/10 (0 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)

This is an entirely free service. No credit card required.

We hate spam as much as you do.
Check out our privacy policy.

Mitchell Clark - Equity Markets Specialist, Financial AdvisorMitchell Clark, B. Comm. is a Senior Editor at Lombardi Financial specializing in large- and micro-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Income for Life and Micro-Cap Reporter. Mitchell, who has been with Lombardi Financial for 17 years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. Add Mitchell Clark to your Google+ circles