Large US companies bolstering the Dow. Although profit estimations for major Wall Street lenders have been cut in the wake of weak economic forecasts, the market is still discounting significant corporate growth in the past three months.
This earnings season, which Alcoa kicked off per usual on Tuesday, the Dow Jones announced a 13% jump in corporate profits between July and September. United States companies are meeting earnings expectations, and they are doing so with aplomb. "We have been hitting predictions for several months now," said Iván Félix from Renta 4. The latest data gathered by Bloomberg confirm this figure: 87% of Dow Jones companies beat the market's expectations with growth of around 14%.
Still, this recent round of earnings reports could end on a sadder note. "Now it is a bit more complicated, considering that the market is increasingly more demanding," said San Félix, who hopes that companies do not "raise their expectations too much."
Expectations
Doubtless, experts are demanding more positive results. It is necessary that they show that at a corporate level growth is accelerating despite what some economic data suggest. So much so that the investment bank consensus (collected by FactSet) estimates that two in three companies on the Dow Jones index will post improved results compared to the same period of time of last year. Not all the data corresponds to Q3 of 2011 necessarily, because in the United States many companies observe their own fiscal year.
