Friday, October 9, 2015

Earnings Stumble Out of the Gate

Earnings season kicked off this week with the traditional first reporter, Alcoa. Not only is Alcoa always the first to report its earnings each quarter, but its reports are considered something of a bellwether for the quarter ahead, Some studies show that it does project the overall direction of the market: When Alcoa beats expectations, the market tends to rise.

If that's the case, the news is not good. For the quarter, Alcoa earned $44 million, or two cents a share; a year ago, it earned $149 million, or 13 cents a share. Excluding certain items, the company earned $109 million, or 7 cents a share. That was well below the Wall Street consensus of 13 cents a share.

But expectations were very low to begin with. S&P 500 profits are expected to contract 5.6 for this quarter, which would be a second consecutive down quarter. The good news is, that makes upside surprises a little easier to come by.

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