Balance on Wall Street

Published on: 14-Oct-2019
Category: Trading
Last updated: 16-Oct-2019

Balance on Wall Street

The US economy is fluctuating, and the listed companies are recording a decline in profits. The companies listed in the broad-based S & P 500 index saw a 4.1% decline in their profits in the third quarter compared to the previous year. Also, the two quarters before, Wall Street has posted declining profits. Over the next few weeks, the major American banks will present their quarterly figures, showing the development of corporate profits. In times of global uncertainty due to trade conflicts, this will be an indicator of the future.

The S & P 500 outperformed 17 percent this year, with corporate earnings declines from the forecast decline of 0.6 percent to 4.2 percent. Public companies in the S & P 500 who transact most of their business abroad are expected to lose an average of eleven percent of their profits. 20 percent of the S & P 500's corporations come from abroad.

Investors should pay especially attention to the development of cyclical consumer goods, which account for 66 percent of economic output and whose profit forecasts have been reduced to as much as eleven percent.

In support of the US economy, the US central bank has already cut interest rates twice this year. Experts also consider a further rate cut at the end of October very likely. However, central bank president Jerome Powell has emphasized that the Fed will never set its decisions first but will always decide on the current economic situation.

The upcoming balance-sheet season will show how companies coped with the trade dispute with China and how severe the impact was on sensitive sectors such as energy and technology companies.


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