After Cliff, Markets Will Now Focus On Earnings:
With the beginning of a new year, the markets are now eagerly waiting for the results season, which is due a few days. But, major analysts are saying that this earnings season is going to be static temporarily.
As the fourth quarter reports on markets was slightly down on this week, the US investors have decided that after the fiscal cliff worries, they will now focus more on fundamental concerns like earnings.
The market is closed on Tuesday with Alcoa, the aluminum company whose financial results are being expected to be slightly higher than the third quarter results which were lackluster.
Most of the financial analysts are taking this as a warning sign and had opinions that instead of this new raise in earnings estimates in the market, these recent estimates are sharply down from the estimates of October. The new market assumptions claim that these new estimates will set the stocks up in trends where it will tend to fluctuate sharply & regularly.
Since December 31, 2007, the market has experienced the highest & sharp gains in the standard & poor’s 500 index on following week. On Friday, this index also registered for its highest weekly percentage gain in last few years.
In recent international conference calls on earnings, almost 10 companies expressed their worries on macroeconomic issues, while for at least nine of them; the main concerning issue for their earnings warnings was the US fiscal cliff.
Kurt winters, who is the senior portfolio manager of White box Mutual Funds in Minneapolis said, “The number of things that could go wrong isn’t so high, but the magnitude of how wrong they could go is what’s worrisome.” According to the data of Reuters, the negative to positive guidance ratio of S & P 500 companies was 3.6 to 1 in the fourth quarter. This ratio is being recorded as the second worst rate since the third quarter ratios of 2001.
Last week, the United States lawmakers have made a last minute agreement on a bill so that they can avoid the steep increase of tax to avert the fiscal cliff narrowly. Instead of that, it is being assumed that this new drive will make the markets to rally in the coming future. Still there are expectations that in between upcoming two months, the battle over reducing additional spending will resume.
Still in given cautious situation, some analysts are talking in a positive sound about the market and continue to say that they are seeing good chances of earnings beat in the given reporting quarter or period.