Earnings Season Favors Large Caps as Economy Shows Signs of Recovery

Strategic Insights -

As the U.S. economy continues to show signs of recovery, large cap stocks are expected to lead the way in the third quarter earnings season, surpassing their mid and small cap counterparts. With many industries showing steady stabilization, investors are looking for promising results from major corporations. Meanwhile, smaller companies are facing challenges in rebounding at the same pace.

Key Takeaways:

  • Large cap stocks are set to outperform mid and small cap stocks in the third quarter earnings season, with the U.S. economy emerging from recession.
  • Private equity firm Blackstone Group is planning to list up to eight of its portfolio companies, seeking to capitalize on the favorable market conditions.
  • Tengzhong, the Chinese buyer of General Motors' Hummer brand, aims to close the deal by early 2010, but faces regulatory hurdles.
  • President Barack Obama's top economic adviser reported that the U.S. is on the path toward economic recovery, with initial signs of stabilization in the housing market.
  • Several U.S. companies awarded stock options to top executives while engaged in merger talks, raising concerns about executive compensation and merger deal-making.
  • Philips Electronics reported better than expected third-quarter results, with its share price bouncing back from a recent decline.
  • Lazard Ltd's Chairman and Chief Executive Bruce Wasserstein has been hospitalized for an irregular heartbeat, sparking concerns about the company's leadership.

Statistics:

  • The U.S. economy has shown steady signs of recovery, with conditions in financial markets becoming steadier.
  • Large cap stocks are expected to lead the third quarter earnings season, with a stronger rebound compared to mid and small cap stocks.
  • Tengzhong aims to close the deal for General Motors' Hummer brand by early 2010, a timeline that is not guaranteed.
  • Several U.S. companies have awarded stock options to top executives during merger discussions, a practice that is not unique to these transactions.
  • Philips Electronics reported a 10% increase in revenue compared to the same quarter last year, beating market forecasts.

Sources:

  • "Small firms outpaced by big-caps on earnings" (October 6, 2009)
  • "Blackstone plans portfolio IPOs: source" (October 9, 2009)
  • "Tengzhong seeks approval for Hummer buy; hurdles seen" (October 12, 2009)
  • "Obama aide defends stimulus package" (October 5, 2009)
  • "U.S. firms gave options to execs during merger talks: report" (October 8, 2009)
  • "Philips beats forecasts but still cautious" (October 5, 2009)
  • "Lazard says CEO Wasserstein hospitalized" (October 11, 2009)