Profits Fall, Recession Fear Looms

Profits Fall, Recession Fear Looms

$DIA, $SPY, $QQQ, $AMZN, $GOOGL, $MSFT, $MON, $FAST

Recession fears are growing among large U.S. companies that are expected to report quarterly declines in profits and sales for the first time since the recession, according to The Wall Street Journal.

“The industrial environment’s in a recession. I don’t care what anybody says,” said Daniel Florness, CFOof Fastenal Co.(NASDAQ:FAST), the newspaper reported. A third of the Top 100 customers for Fastenal’s nuts, bolts and other factory and construction supplies have cut their spending by more than 10 percent and nearly a fifth by more than 25%, he said.

Factory production rose in September at the slowest pace in more than two years, the Institute for Supply Management said this month. Manufacturers told ISM that customer inventories remained high, contributing to a slowdown in new orders.

The crash in Crude Oil prices since the Summer of 2014 explains part of the slowdown among manufacturers that supplied energy producers with equipment. The USD strengthened with the expectation that the Fed would raise interest rates for the 1st time since Y 2006, and that pressured earnings from overseas markets.

Corporations are taking on record levels of debt to fund dividends and stock buybacks, while cutting jobs. Twitter Inc.(NYSE:TWTR), Biogen Inc., Wal-Mart Stores Inc (NYSE:WMT). and Monsanto Co. (NSE:MON) have announced job cuts in recent weeks, according to the WS-J.

Still, some see reason for optimism as lower gas prices at the pump have helped to boost car sales and airlines stocks, while construction and aerospace are doing well. Amazon.com Inc.(NASDAQ:AMZN), Microsoft Corp.(NASDAQ:MSFT) and Google parent Alphabet Inc. (NASDAQ:GOOGL) rallied after reporting strong results last week.

US major market indexes finished Monday at: DJIA-23.98 at 17622.72, NAS 100 +2.84 at 5034.70, S&P 500 -3.99 at 2071.16

Volume: Trade was below average, as fewer than 850-M/shares changed hands on the NYSE.

• NAS 100 +6.3% YTD
• S&P 500 +0.6% YTD
• DJIA -1.1% YTD
• Russell 2000 -3.8% YTD

Stay tuned…

HeffX-LTN

Paul Ebeling

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