Slower Economic Growth Worries Market

123jump.com Staff
28 Apr, 2005
New York City

Positive Earnings continue to flow from companies in every sector, home builders, defense, chemicals, health insurance, railroads, energy and technology. But market seem to worry that earnings growth may not be sustainable if economy does not pick up more momentum.

Commerce department reported that GDP growth of the nation’s economy was at 3.1% lower than most economists had forecasted. Rising energy prices and weak consumer and business spending led to slow growth in two years.

Growth in spending for equipment and software by businesses declined to 6.9% from 18% in the previous quarter when economy had registered growth of 3.8%.

Consumer spending on big ticket item was flat in 1Q compared to 3.9% in the last quarter of 2004. Rising energy prices also had impact on the discretionary consumer spending.

Trade deficit on rising energy prices and American preference for imported products also lowered the economic activity at home.

Commerce Department noted in the report “final sales of computers contributed 0.56 percentage point to the first-quarter change in real GDP, the same contribution as to the fourth-quarter change.

Motor vehicle output contributed 0.17 percentage point to the first-quarter change in real GDP after contributing 0.86 percentage point to the fourth-quarter change.”

On second report, Labor department reported that number of new people asking for unemployment benefits rose by 21,000 to 320,000 in the last week.

S&P - 1.14% DOWN
Nasdaq - 1.36% DOWN
Dow - 1.26% DOWN


In Other News

Asian markets closed unchanged as Japan is getting ready for a long holiday week, shares in Australia continue to display weakness with mining stocks falling more than 1%.
Brazilian Stocks fall more than 2% on interest rate hike.
European stocks end lower, economic uncertainty outweighed good earnings results from Glaxo, Royal Dutch/Shell and Deutsche Bank.
In volatile trading Canadian dollar traded below 80 cents to 79.94 U.S. cents on political uncertainty.



Earnings Headlines

Several companies declared reports where profits jumped more than 100%. The companies that fall in this camp are:

Dow Chemical $1.39 vs. 50 cents
Black & Decker $1.80 vs. $1.09
Comcast 14 cents vs. 3 cents
Barrick Gold 10 cents vs. 5 cents
NCR reported 16 cents vs. 3 cents

Other companies reporting earnings were as follows.

AutoNation reported 1Q earnings of 33 cents vs. 32 cents.
Aetna reported 1Q profit of $1.39 vs. $1.14.
Beazer Homes reported 2Q loss of $2.09 vs. profit of $1.17.
Nextel reported 1Q profit of 52 cents same as a year ago.
Burlington Northern reported 1Q profit of 83 cents vs. 52 cents a year ago.
DaimlerChrysler profit falls 30% on sales drop of 2%.
Wendy’s international reported 1Q profit of 45 cents same as a year ago.
CSX reported profit of $2.56 vs. $1.88 a year ago.
Energizer Holdings reported 2Q profit of 78 cents vs. 63 cents a year ago.
Raytheon, Unied Defense, and Northrop Grumman, defense Contractors, reported strong earnings growth as reported by Locheed Martin a day ago.