Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (14519)	10/24/2002 2:21:20 PM
From: stockman_scott	Respond to of 57684

Q3 Profits Beat Views, Climb 6% As Recovery Reaches Bottom Lines By Brian Deagon Investor's Business Daily Wednesday October 23, 10:07 am ET Halfway through the earnings season, reports from companies in the S&P 500 are running slightly better than expected - and up about 6% from a year ago. Of the 255 companies that reported third-quarter earnings before the markets closed Tuesday, 60% beat views, and 28% met them. That's just above the average for the last eight years. The number of companies missing views, at 12%, is half what is usually seen, according to Thomson First Call. "I don't see anything that says we're headed for a double-dip recession," said Chuck Hill, analyst at Thomson First Call. "And it's not going to happen in the fourth quarter, either." As good as that sounds, third-quarter earnings compare with a weak year ago, when the U.S. was in recession - and under attack. Also, third-quarter views have been guided lower since July. Back then, analysts expected earnings of the S&P 500 to come in almost 17% above the year before. They have since cut that to 5%, though actual earnings reported have come in above 6%. In addition, the stock market showed weakness Tuesday, with prices down and volume up. The best news is that earnings have grown for two straight quarters, sequentially and from a year ago. It looks like they will do the same in the fourth quarter. Below Average Still, the growth is below the average of the last eight years, and comes amid slowing consumer spending and falling confidence. Market-watchers fear that a further slowdown in consumer spending could push the U.S. back into recession. "I expect to see consumer spending slow down, which would mean a slower expansion, but I don't think we'll slip into a recession," said David Wyss, chief economist at Standard & Poor's. Wyss sees business spending picking up, but said it's "nothing like we saw in the late '90s. It will take us a few more years to get back to where we once were." Analysts have begun to cut earnings views for the fourth quarter. They now see profits up 17%, down from 28% five months ago. And the outlooks provided by S&P firms have presented a cautious view for the fourth quarter. The problem is it's harder than it used to be to predict what's ahead. "Things still look sluggish," said Ed Yardeni, chief economist at Prudential Securities. "CEOs have been hesitant to put a positive spin on what's ahead." Yardeni, Hill and Wyss all think some of the uncertainty and nervousness among business leaders and consumers has to do with threats of terrorism and a possible war with Iraq. Corporate scandals over the past six months have hurt as well. "There is some evidence consumers are holding back," said Yardeni. "I think it's because they don't like what they see in the stock market. They are also concerned about geopolitical risks. But I don't think they are stressed out about their income." In terms of what sectors have performed best, those industries with the best EPS growth in the third quarter are: transportation, up 37%; financial, up 28%; consumer cyclicals, up 27%; and technology, up 24%, says First Call. Earnings comparisons for the S&P 500 will get tougher in 2003, according to First Call. It sees earnings up 15% in the first quarter and 14% in the second. biz.yahoo.com