More reports of falling earnings and slashed forecasts sent US stocks lower for another week, with uncertainty over the Nov. 6 US presidential election and what will follow, policy-wise, increasingly holding investors’ sway.
Company after company cited slow growth in China, the eurozone crisis and uncertainty over US policy — particularly the “fiscal cliff” — as they reported slowing sales and tighter margins.
While the news was not all bad — a mix of companies like Comcast Corp, Facebook Inc, Yahoo Inc and Boeing Co all did well — the general picture was glum.
Even companies like Caterpillar Inc, which beat analysts’ expectations on profits, fell short on revenues and warned of tougher conditions in the coming year.
“As we’ve moved through the year, we’ve seen continued economic weakening and uncertainty. It’s definitely impacting our business with dealers intending to lower inventories and mining customers delaying some projects and reducing orders,” Caterpillar chief executive Doug Oberhelman said.
That set the mood for trade for the week. Ending at 13,107.21 on Friday, the Dow Jones Industrial Average was off 1.77 percent for the period.
The S&P 500 gave up 1.48 percent to 1,411.94 and the NASDAQ Composite slipped 0.59 percent to 2,987.95.
Major companies that missed performance expectations in their quarterly reports included giants like Apple Inc (minus-1 percent for the week), Amazon.com Inc (minus-0.7 percent), Dow Chemical Co (minus-1 percent), DuPont Co (minus-8.4 percent), and Procter & Gamble Co (plus-1.3 percent).
Apple profits continued to soar and the company offset its target miss with the launch of the iPad Mini and updated its other products, but its slower growth and lowered guidance was taken as a sign of tightness in consumer pockets.
Apple “will not be immune to the undercurrent of economic sluggishness, especially in the consumer space, where higher gasoline prices are leaving consumers with little money for their next favorite gadget,” Global Equities Research’s Trip Chowdhry said.
The picture was not helped by Friday’s report that US economic growth had picked up pace to 2 percent at an annual rate in the third quarter, after the turgid 1.3 percent second quarter.
That confirmed the view of the US Federal Reserve’s policy board that the economy still faces hurdles.
IHS Global Insight US economists Nigel Gault and Paul Edelstein said the low gear economy would remain a drag on profits.
“The details confirm our view that the economy will further experience modest but sub-par growth,” they said in an analysis on Friday.
“From a corporate earnings perspective, this is unwelcome news. Profits had been growing at a double-digit pace as companies benefited from strong overseas demand and productivity enhancements that compensated for domestic weakness,” Gault and Edelstein said, adding “But the latest earnings reports indicate that those opportunities are harder to exploit, leading many companies to downgrade their profit outlook.”
The coming week will be dominated by elections talk, ahead of the vote on Tuesday, with US President Barack Obama and Republican challenger Mitt Romney neck-and-neck.
Also looming is a mega storm expected to hit the US East Coast on Tuesday which has the potential of causing widespread damage.
That aside, the earnings season that peaks out next week is likely to confirm that picture, with reports coming in from Pfizer, the three big US auto companies, ExxonMobil Corp, AIG Inc, Chevron Corp, News Corp, Walt Disney Co, Cisco, Dell Inc and Hewlett-Packard Inc.
Economic data releases include personal income and consumption last month (to be released tomorrow); the Case-Shiller home price index (Tuesday); consumer confidence (Tuesday); last month’s construction spending (Thursday) and this month’s jobs report (Friday).
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained