S
Sarcastic American!
Guest
YUP, IF ALL CARE ABOUT YOUR RICH PIG FRIENDS AND DON'T CARE ABOUT THE
AMERICAN WORKER THEN YOU **** UP THE ECONOMY!
WEEEEEEEEEEEEEEEEEE!!!!!!!!!!!!!!!!!!!!!!!
Multinationals drive US rally on weak dollar
By Francesco Guerrera and Michael Mackenzie in New York
Published: October 2 2007 18:48 | Last updated: October 2 2007 18:48
Multinationals have emerged as the main drivers of the current US
stock market rally as investors move to capitalise on the weak dollar
by buying into companies with large overseas earnings.
The strong performance of international companies such as Procter &
Gamble, Coca-Cola and Intel over the past six weeks has pushed US
stocks to new highs, helping the market shrug off the ongoing credit
squeeze and the growing risk of a US recession.
"2007 will go down as the year the rest of the world saved America,"
said Joseph Quinlan, chief investment strategist at Bank of America.
"The belief that the dollar is going to weaken further is prompting
investors to own international large-cap stocks."
The strong showing by multinationals comes as US and foreign fund
managers switch away from small capitalisation and US-centred
companies they had favoured in the recent past.
The stock market strength contrasts with previous rallies following
interest rate cuts, which tended to benefit domestically-focused
companies such as regional banks and retailers.
This time, after the US Federal Reserve cut rates by 50 basis points
on September 18, multinationals rallied while retailers such as Wal-
Mart and Home Depot remained dogged by concerns over the health of US
consumer spending.
The weakness in the dollar, which has hit a series of all-time lows
against major currencies, benefits multinational companies in two
ways: it makes their US-made products cheaper on international markets
and increases the dollar value of their overseas earnings.
The Dow Jones Industrial Average has risen nearly 10 per cent in the
past six weeks, hitting a new record high on Monday.
Companies with large overseas operations have been at the forefront of
the rally. Since the Dow's previous record - on July 19 - eight of the
top ten performers have been multinational companies, led by P&G but
also including Hewlett-Packard, Johnson & Johnson and McDonald's.
The Dow was down slightly in New York at midday on Tuesday after
sharply weaker-than-expected pending home sales data deepened fears of
a recession. The dollar also edged off recent lows.
However, many analysts remain bullish on the earnings outlook after
the third quarter of the year.
Growth in S&P 500 company earnings is forecast to slow to about 3.9
per cent in the third quarter, dragged by weaker-than-expected
performance in the financial and consumer sectors.
Earnings at financial companies are now seen rising 4 per cent rather
than the 9 per cent forecast at the beginning of July, according to
Thomson Financial.
Consumer discretionary stocks, which include retailers and
homebuilders, are expected to suffer a 4 per cent earnings slide. In
July, analysts were forecasting a 3 per cent rise in the sector.
Healthcare, with expected growth of 12 per cent, and technology, with
10 per cent, have the highest growth rates predicted for the third
quarter.
Earnings growth is expected to rebound across the board, reaching 11.5
per cent in the final quarter of the year, and remain strong into
2008, when earnings are seen rising 12 per cent.
Copyright The Financial Times Limited 2007
AMERICAN WORKER THEN YOU **** UP THE ECONOMY!
WEEEEEEEEEEEEEEEEEE!!!!!!!!!!!!!!!!!!!!!!!
Multinationals drive US rally on weak dollar
By Francesco Guerrera and Michael Mackenzie in New York
Published: October 2 2007 18:48 | Last updated: October 2 2007 18:48
Multinationals have emerged as the main drivers of the current US
stock market rally as investors move to capitalise on the weak dollar
by buying into companies with large overseas earnings.
The strong performance of international companies such as Procter &
Gamble, Coca-Cola and Intel over the past six weeks has pushed US
stocks to new highs, helping the market shrug off the ongoing credit
squeeze and the growing risk of a US recession.
"2007 will go down as the year the rest of the world saved America,"
said Joseph Quinlan, chief investment strategist at Bank of America.
"The belief that the dollar is going to weaken further is prompting
investors to own international large-cap stocks."
The strong showing by multinationals comes as US and foreign fund
managers switch away from small capitalisation and US-centred
companies they had favoured in the recent past.
The stock market strength contrasts with previous rallies following
interest rate cuts, which tended to benefit domestically-focused
companies such as regional banks and retailers.
This time, after the US Federal Reserve cut rates by 50 basis points
on September 18, multinationals rallied while retailers such as Wal-
Mart and Home Depot remained dogged by concerns over the health of US
consumer spending.
The weakness in the dollar, which has hit a series of all-time lows
against major currencies, benefits multinational companies in two
ways: it makes their US-made products cheaper on international markets
and increases the dollar value of their overseas earnings.
The Dow Jones Industrial Average has risen nearly 10 per cent in the
past six weeks, hitting a new record high on Monday.
Companies with large overseas operations have been at the forefront of
the rally. Since the Dow's previous record - on July 19 - eight of the
top ten performers have been multinational companies, led by P&G but
also including Hewlett-Packard, Johnson & Johnson and McDonald's.
The Dow was down slightly in New York at midday on Tuesday after
sharply weaker-than-expected pending home sales data deepened fears of
a recession. The dollar also edged off recent lows.
However, many analysts remain bullish on the earnings outlook after
the third quarter of the year.
Growth in S&P 500 company earnings is forecast to slow to about 3.9
per cent in the third quarter, dragged by weaker-than-expected
performance in the financial and consumer sectors.
Earnings at financial companies are now seen rising 4 per cent rather
than the 9 per cent forecast at the beginning of July, according to
Thomson Financial.
Consumer discretionary stocks, which include retailers and
homebuilders, are expected to suffer a 4 per cent earnings slide. In
July, analysts were forecasting a 3 per cent rise in the sector.
Healthcare, with expected growth of 12 per cent, and technology, with
10 per cent, have the highest growth rates predicted for the third
quarter.
Earnings growth is expected to rebound across the board, reaching 11.5
per cent in the final quarter of the year, and remain strong into
2008, when earnings are seen rising 12 per cent.
Copyright The Financial Times Limited 2007
