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Disappointing Blue Chip Earnings Reports Send Wall Street Lower

Discussion in 'International Markets' started by jet-r, Jan 21, 2006.

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  1. jet-r

    jet-r

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    21-Jan: The US market ended the week with heavy losses, as both GE and Citigroup failed to meet investor expectations in their latest earnings reports.

    Despite an increase in sales, Motorola was also unable to satisfy investors after producing a reduced profit outlook.

    A sharp rise in energy prices compounded the impact of the results.

    The Dow finished trade down 1.59 per cent, the S & P 500 ended 1.5 per cent lower and the Nasdaq slumped 2.01 per cent.

    The yield on the 10 year treasury note ended the week down at 4.36 per cent.

    Crude Oil was up $1.46 to $68.65 on the back of increasing concerns about Iran's proposed reumption of the use of nuclear weaponry and threats of a terrorist attack on the US in the latest Al-Qaeda reocrdings.

    In Japan, the Nikkei finished trade steday, follwing a week of fluctuations that saw the index lose over 300 points in a single day before a quick recovery compensated for the losses.

    The other Asian markets were mixed, with the Hang Seng down 0.05 per cent and Straights Times up 10 points.

    In Europe, the Markets finished trade lower.

    Germany's DAX 30 index was the hardest hit, shedding 1.51 per cent, France's CAC 40 index was down by 0.84 percent and in the UK's FTSE 100 index dipped 0.37 per cent.


    This is the second lots of bluechip earning disappointment in one week. It looks like we will have a few more of these. Get ready for a choppy period. :(
     
  2. bullmarket

    bullmarket

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    Hi jet-r

    I watched Nightly Business Report on SBS this afternoon and someone mentioned that although most of the companies that have reported their full year results so far have met or exceeded market forcasts, companys' forward guidance is generally weak and that seems to be having a negative affect on the market on top of investors' sensitivity to companies missing market expected/forcast results. Also bear in mind that General Electric being such a diverse and huge company is generally considered as a barometer for how and where the US economy is going.

    Another analyst on the program said that he didn't expect a recession in the US but he did mention that he was expecting the current 3.5% GDP growth to slow to about 2% in H2 2006

    Imo, it's not all doom and gloom but there are warning signs and greying clouds on the horizon to keep a weather eye on.

    cheers :)

    bullmarket
     
  3. happytrader

    happytrader

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    Hi all

    I thought I might add some commonsense food for thought here. Would it not be reasonable to assume that the results of company reports are known by the people that work there and those that do business with them long before the official 'Report' is released. To that end there would also be no doubt that those with an eye and and ear out, from the storerooms, factory floor, mailroom to the boardroom have taken appropriate action already? I mean seriously wouldn't you?

    Talk is often pretty cheap especially when it come to reports.

    Cheers
    Happytrader
     
  4. jet-r

    jet-r

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    hi happytrader,

    Being an accountant myself, I think in an huge organisation like GE, it would be very difficult to guess how well the company is performing unless it is absolutely obvious. I am sure GE's income are coming from different sectors. You wont be able to find out the profit untill you have done the consolidated profit & loss statements and taken the tax implications into account.
     
  5. bullmarket

    bullmarket

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    hi happytrader

    although there might be some unofficial leaking of rumours, via after work bar talk, work lunches/functions etc etc, from people 'in the know' to the people at the company coal face re how the company is going which may or may not confirm how those at the coal face perceive their company's performance based on their experience, but there are laws against deliberately releasing market and share price sensitive information prior to it being released to the market. So at best, imo those at the coal face will mostly at best have a perception of how their company is going without actually being aware of actual numbers. The 'appropriate action' you refer to could be open to being seen as insider trading and so is very risky. But I accept some insider trading to some extent does go on prior to results being released in some cases, but by and large the broader market will be unaware of actual results numbers until they are released. But analysts will always have forcasts and expectations of results prior to results announcements.

    I also doubt very much that the employees of companies they do business with will have much of an idea if the company is going bad, unless of course it is blatantly obvious, because if a company is struggling for whatever reason they will more often than not try to hide the fact from their customers for obvious reasons.

    cheers :)

    bullmarket
     
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