There are macro-cross currents: Earnings are still good, but stocks are acting like the economy is slowing, and consumer sentiment has turned cautious. Are you still confused? Some are keen to trade the market based on a soft landing, while others are keen to trade the recession. Markets aren’t sure, but parts are acting like consumers are slowing down. Elon Musk has joined General Motors and Ford in saying they are wary of expanding electric vehicle production because of concerns that high borrowing costs could deter customers. Tesla fell 6%. Pool Corp., which distributes pool supplies, thinks consumers are becoming more cautious. They won modestly on the top and bottom lines but CEO Peter Arvan said „Pool construction-related activity continues to be weak amid challenging macroeconomic factors weighing heavily on key project consumer spending.” Revenue fell 9% year-on-year. The inventory slowdown, which was so evident in Wednesday’s big drop in JB Hunt on poor earnings, is again evident in Union Pacific’s results. The railway operator saw a continued decline in car loads, which fell by 3%. Global industrials were the worst performers on Wednesday, with stocks such as Ingersoll-Rand, Parker Hannifin and Caterpillar all falling in the 5% range. High rates and high borrowing costs were widely blamed for the industry’s downturn, but there was also this: business conditions for architecture firms worsened in September. The AIA/Deltek Architectural Billings Index, a measure of activity at major architectural firms, has recorded its lowest level since September 2020 during the peak of the pandemic. The index „indicates that the share of firms reporting lower billings increased significantly. Additionally, the value of newly signed design contracts also fell in September, indicating a growing reluctance among clients to sign contracts for new projects.” Major infrastructure companies such as Donaldson, Wesco, AECom and Watsco all fell 4%, as did Ingersoll-Rand and Parker Hannifin. Construction infrastructure was also disrupted, including Vulcan Materials, Martin Marietta and Fluor. Parker-Hannifin and Ingersoll Rand are up more than 1% today, but Caterpillar is down nearly 1%. Earnings are still good, but not as strong as early reporters, so far seventy-eight companies (15% of the S & P 500) have reported, although the average earnings beat is still good (5.5%), which is lower than the pace of companies that reported earlier. Revenue growth of 2.8% is good but lower than previous reports. And it could fall further, especially after energy companies announce an expected decline in profits. Revenue growth is still strong at 6.4%. S&P 500 earnings (78 companies report) Avg. Earnings pulse: 5.5% Earnings growth: 2.8% Earnings growth: 6.4% Source: Earnings Scout Welcome to the 'longer horizon’ Jobless claims came in lower than expected, chances of a recession still look slim, but inflation hasn’t eased. Call it „more for the long haul.”
„Oddany rozwiązywacz problemów. Przyjazny hipsterom praktykant bekonu. Miłośnik kawy. Nieuleczalny introwertyk. Student.