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Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (45199)	7/26/2003 8:03:49 PM
From: Lazarus_Long	Respond to of 57110

Not strong yet, but signs of improvement. A few more ads in the papers, even a few radio ads. Unless, of course, they move the jobs to India. :-( ....................................................................................................................... Analysts wary as US figures hint at upturn By Mary Chung and John Labate in New York Published: July 25 2003 20:39 \| Last Updated: July 26 2003 0:54 Record new home sales and hints of a recovery in capital spending on Friday boosted hopes that better than expected corporate profits signalled a second half upturn in the US economy. Although the recent rise in mortgage rates could soon puncture the buoyant US housing market, the rise in durable goods orders in June suggested business spending might pick up the slack from the consumer. But some economists said it was too soon to call a turn in capital spending and warned the strong increase in second quarter earnings reported by leading US companies was less bullish for the economy than it seemed. About 60 per cent of the top 500 US companies have reported, with two-thirds beating analysts' expectations. Operating earnings are up 8.1 per cent compared with forecasts of 5.3 per cent. Russ Koesterich, US equity strategist at State Street, cautioned that much of the outperformance was due to the fall in the dollar and cost-cutting rather than a rise in demand. "I do not think anything happened in this earnings season that has given investors additional conviction for significant second half rebound. We need to start seeing an acceleration of top-line growth because this cost-cutting is getting old." But the more bullish argue that the strength of earnings despite the lack of revenue growth means the US economy is "coiled like a spring", as John Snow, Treasury secretary, put it recently. The durable goods orders, which were up 2.1 per cent in June compared with Wall Street expectations of 1 per cent, could signal the end of what Alan Greenspan, Federal Reserve chairman, called the "pervasive sense of caution" among US businesses, some economists said. But others warned against reading too much into the figures. "Durable goods were stronger than expected but we have yet to break out of the range we've been in for the last nine months or so," said Stephen Roach, chief economist at Morgan Stanley. "It's not a sign of an imminent explosion of the US economy". But shares reacted strongly with the Dow Jones Industrial Average rising 172 points to 9,284.57. Investors have taken a generally bullish view of second quarter profits, even where it has been continued cost-cutting that has driven earnings growth. Wall Street has also been cheered by the resurgence in mergers and acquisitions, an inflow of money into mutual funds and a sharp upturn in share trading by retail investors. Following the better than expected second quarter earnings, analysts have upgraded forecasts for the rest of the year, which some observers believe are now too optimistic. Wall Street is now expecting third quarter earnings to increase 13.5 per cent and fourth quarter earnings to rise by 21 per cent. .......................................................................................................................... news.ft.com That bolded part I find hard to believe.