Brace for market turbulence
Sam Ro
BusinessInsider.com
Sept. 29, 2015
Fiscal drama threatens to rattle the confidence of investors as US Congress once again pushes the government toward a shutdown.
But that’s arguably a sideshow to a much bigger problem faced the companies in the US stock market: weak earnings.
“Politics aside, 3Q earnings season could prove turbulent given recent macro developments,” Goldman Sachs’ David Kostin wrote on Friday.
“For a second consecutive quarter, economic turmoil in China alongside mixed US economic activity and a generally strengthening dollar will likely weigh on corporate results. Crude oil prices have plunged by 19% since last quarter, suggesting more pain for the Energy sector.”
Earnings is the most important driver of stock prices. And lately, earnings growth has flattened out and expectations are for coming periods is for negative growth. Stock prices have already experienced heightened volatility lately, with the S&P 500 now down over 8% for the year.
In a video released early Tuesday, billionaire investor Carl Icahn observed that corporate earnings were looking fragile, and he questioned whether there’d be any buyers as investors look to dump stocks.
The Rest…HERE
