Investors Want More Than “Par” Earnings

Halfway through fourth-quarter earnings season, U.S. stocks are coming off their worst January in years, sending the message to Corporate America that par for the course isn’t good enough after the run-up in stock prices over the past year.

The Dow Jones Industrial Average DJIA -0.94% ended the past week down 1.9%, capping a monthly decline of more than 5%, its worst January since 2009, when it fell 8.8%. Likewise, the S&P 500 Index SPX -0.65% finished the month down 3.6%, its worst January since 2010, when it fell 3.7%. Finally, the Nasdaq Composite Index COMP -0.47% finished down 1.7% for the month for its worst January since 2010, when it dropped 5.4%.

Declining emerging-markets currencies such as the Turkish lira and the South African rand, coupled with a contraction in Chinese manufacturing, weighed heavily on markets as the Federal Reserve pushed forward with its tapering of monthly asset purchases this past week. All that uncertainty, along with the S&P 500’s 30% gain in 2013, has raised investor expectations about quarterly earnings results.

“Investors are like children: If you tell them you’re bringing home a puppy, you better have a puppy when you get home,” said Nicholas Colas, chief market strategist at ConvergEx.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu