Since the beginning of the year, key stock indices have been experiencing wild swings. One day they are up significantly, and the next day, all the gains made are lost. The opposite is true, too; one day down big-time, and the next day back up.
In the past, we have seen this sort of pattern develop when stocks or commodities are forming a top.
Corporate Earnings Growth Forecasts Continue to .
Apple Inc. (NASDAQ/AAPL) may be shining bright after delivering an astounding record quarter, in which the company sold a staggering 74.5 million “iPhones.” But while the stock market is giddy on how Apple is performing, especially in China, where it is now the top seller of smartphones, the reality is that this earnings season has largely been a bust after about 100 S&P 500 companies have reported to date.
The bottom line is turning out to be one of the major stories this earnings season. A tough global environment and the stronger U.S. dollar (which was expected) are impacting sales. But earnings are mostly still coming through.
DuPont and 3M Reporting Decent Earnings, Slow Sales
One company that perfectly illustrates this trend is E. I. du Pont de Nemours and Company (DD), or DuPont, whose share price is .
It really is a great time to be in the railroad business. Cash flow is abundant and these stocks are poised for more capital gains.
While coal shipments have been a weak spot for railroad companies, virtually all other major customer sectors are producing excellent comparable growth.
And that growth is directly reflected in share prices. Railroad stocks have been—and continue to be—on a tear.
When the broader market corrected .
Lots of corporate earnings are still streaming in for the third quarter, though mostly among smaller-cap companies. Top-line growth certainly isn’t robust, but it’s not bad either. The surprise I’ve noticed in third-quarter reporting has been the profitability. There has been plenty of double-digit comparable earnings growth on single-digit sales reported.
One micro-cap company that just reported a solid quarterly performance is Blount International, Inc. (BLT).
This Portland, Oregon-based company .
According to research by UC Berkeley, in 2012, the top one percent of income earners in the U.S. earned 22.5% of all the income. The bottom 90%, on the other hand, earned less than 50% of all the income. (Source: Pew Research Center, January 7, 2014.) Income inequality in the U.S. economy is the highest it has been since 1928. The rich are getting richer, and the poor are seeing .
Now that the Dow Jones Industrial Average has fallen 1,035 points (six percent) from its mid-September peak, the question investors are asking is “how far will she go?” For small-cap investors, the drama is greater, as the Russell 2000 Index has fallen 12.5% from its July peak.
Since 2009, every market pullback presented investors with an opportunity to get back into stocks at discounted prices. Even some editors here at .
If there’s one thing the stock market needs, it’s a distraction from global growth worries and geopolitical events. And corporate earnings are the ticket for that as this season’s numbers are starting to pour in.
Pharmaceutical benchmark Johnson & Johnson (JNJ) once again beat Wall Street consensus, generating another good quarter of both sales and earnings growth.
The company completed a major divestiture of its ortho-clinical diagnostics division during its .
My favorite pharmaceutical company for long-term investors is still Johnson & Johnson (JNJ), for now.
This business has managed to produce very good financial growth in recent history and its share price has appreciated exceptionally well considering this is a DOW stock, especially over the last two years.
Large-cap companies can’t avoid the business cycle and they can’t avoid industry-specific trends. For pharmaceuticals in particular, the drug development cycle can .
The stock market is clearly struggling to stay afloat at this juncture, balancing the domestic economic renewal with the global risk coming from ISIS, Russia, the eurozone, and economic stalling in China.
A major catalyst or a reason to buy is what investors are searching for. The focus later next week will shift to the third-quarter earnings season, which is carefully monitored by investors.
The start of the third-quarter earnings .
Immediate term outlook:
The bear market rally in stocks that started in March 2009, extended because of unprecedented central bank money printing, is coming to an end. Gold bullion is up $1,000 an ounce since we first recommended it in 2002 and we are still bullish on the physical metal.
Short-to-medium term outlook:
World economies are entering their slowest growth period since 2009. The Chinese economy grew last year at its slowest pace in 24 years. Japan is in recession. The eurozone is in depression. With almost half the S&P 500 companies deriving revenue outside the U.S., slower world economic growth will negatively impact revenue and earnings growth of American companies. Domestically, America’s gross domestic product grew by only a meager 2.3% in the second quarter, which will negatively impact an already overpriced equity market.
Estimates Aug. 29, 2015
Trailing 12-month EPS for Dow Jones companies (Most Recent Quarter)