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Wall Street and Global Markets Struggle to Meet Earnings Expectations

Strategic Insights

— 1 min read

US companies' inability to exceed earnings expectations, combined with their conservative forecasts for 2004, led to a lackluster performance on Wall Street yesterday. The dollar continued to face pressure, despite recovering some losses, and the euro remained strong following comments from European Central Bank officials. Despite this, Corporate America has managed to meet investors' expectations for fourth-quarter results, with the Dow Jones Industrial Average and Nasdaq Composite posting mixed performances.

Key Takeaways:

  • The inability of US companies to beat Wall Street's high earnings expectations and their disinclination to offer extravagant forecasts for 2004 left stock markets looking world weary.
  • The dollar came under renewed pressure after suffering its biggest one-day fall against the euro on Tuesday, but subsequently pared some of the losses.
  • European Central Bank chief economist Otmar Issing stated that euro strength would not lead to interest rate cuts, a sentiment supported by ECB council member Nout Wellink.
  • Corporate America has so far delivered on investors' expectations for fourth-quarter results, with the Dow Jones Industrial Average and Nasdaq Composite posting mixed performances.
  • European markets edged ahead, driven by a strong showing in German utilities and hopes that the government would not allow EU plans to hurt lignite-fueled generators.
  • JP Morgan issued a bullish note on the European-wide utilities sector, stating that it would be relatively immune to rises in interest rates and the falling dollar.

Statistics:

  • The Dow Jones Industrial Average was 0.6 per cent higher by mid-afternoon.
  • The Nasdaq Composite pulled back 0.6 per cent from Tuesday's 2 1/2-year closing high.
  • The FTSE Eurotop 300 index closed at a near 17-month high of 993.38, up 0.6 per cent.
  • US light crude oil futures were steady after reaching a 10-month high on Tuesday.
  • Opec stated that global oil stocks are more comfortably supplied than current high prices suggest, with a 3m barrel-a-day surplus looming in the second quarter.

Sources:

  • Bloomberg
  • Reuters
  • Financial Times

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