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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: TimbaBear who wrote (31183)	10/23/1999 12:51:00 PM
From: Jacob Snyder	Respond to of 99985

As Consumer Spending Motors Along, Corporate Profits Reach Skyward By NATALIE BLITT THE WALL STREET JOURNAL INTERACTIVE EDITION October 22, 1999 A thriving economy and relentless consumer hunger are spurring robust profit growth. "We're seeing strong consumer spending, strong spending on technology and very solid recoveries in trading and lending activities of major banks," says Hugh Johnson, chief investment officer at First Albany Corp. So far, third-quarter net income has climbed 27% from last year. Net profit on continuing operations, which excludes one-time accounting entries, has grown 22%. The figures are based on 393 U.S. companies in the Dow Jones Global Indexes that have posted earnings so far. That leaves a little less than half of the 722-firm U.S. class left to report. Underlying the profit growth is an economy running at full tilt. Economists surveyed by Thomson Global Markets estimate that gross domestic product grew at a 4.1% annual rate in the third quarter (the government's first estimate for the period is set for release Oct. 28). But the gains have more behind them than just domestic bliss. Problems a year ago also make this year's earnings stand out. Last year's General Motors Corp. strike, the strong dollar and fallout from 1998's global financial turmoil hit companies from banks to commodity producers. In the third quarter of 1998, net income inched up only 3%, while income excluding items slipped 1%. Since then, earnings have been on an upward trajectory. Net profit on continuing operations increased 9.6% in the first quarter, and 15% in second. "This is very consistent with notions of a synchronized business expansion," Mr. Johnson says. "The recovery in Asia and Europe is very solid." Many analysts think profit growth is near its peak, however. "This is also the best we're going to see for a while," says Chuck Hill, director of research at First Call/Thomson Financial, which tracks corporate earnings. "Earnings are expected to taper off next quarter." First Call sees growth coming in at 20% for the fourth quarter and 18% for the first quarter of 2000.