Growth Concerns Take Center Stage - Analyst Blog
16 8월 2011 - 6:07PM
Zacks
Stocks will likely be unable to sustain the three-day rally of
sorts as the reality of economic growth uncertainty comes back to
center stage. We have a number of reports out this morning that
highlight the lack of economic growth, not just here in the U.S.,
but also in Europe.
We have known about Europe's debt problems for awhile, but this
morning brought in a weaker-than-expected report about EuroZone's
GDP growth in the second quarter. German economic growth was barely
in the positive column, while France had no growth at all. The
sharp slowdown from the first quarter's growth pace raises
questions about the interest rate hikes implemented by the European
Central Bank recently.
Lack of growth makes it difficult for European leaders to tackle
the common market's escalating debt problem. The leaders of Germany
and France are meeting today to discuss that issue. The idea of
issuing Euro bonds, along the lines of U.S. Treasury bonds, has
been gaining more traction in recent days as a way to address the
problem.
The idea is not on the agenda of today's meeting, and has been
dismissed in the past by the leaders of Germany and France. But
with the debt crisis steadily moving from the peripheral nations of
Greece, Ireland and Portugal to now Spain, Italy and even France,
it's time may finally have come.
Growth is the best antidote to the debt problem that has taken hold
in the developed economies of Europe, the U.S. and Japan. But it is
difficult to grow when all these rich markets are mired in problems
at the same time. Had it not been for the robust growth coming out
of the emerging markets, the developed world would be in even worst
shape.
On the earnings front,
Wal-Mart (WMT) came out
ahead of EPS and revenue expectations, even as U.S. same-store
sales dropped for the 9th quarter in a row. I am not sure if
Wal-Mart has lost its way or it's just the law of large numbers at
play here. We have to concede, though, that when your quarterly
revenue exceeds $100 billion, then you need a lot of
incremental sales to move the needle.
We also got top- and bottom-line beats and raised guidance from
Home Depot (HD).
Agilent
Technology (A), the maker of scientific instruments,
reported better-than-expected results after the market's close on
Monday, but provided an inline guidance for the current quarter.
Dell (DELL) reports after the close today.
As reassuring as these positive earnings reports are, the bigger
worry for the market remains the uncertain growth outlook. Some of
the more dire fears about recession appear to have eased a bit in
the last couple of days. But we are hardly in the clear yet. It
will likely be at least another a few weeks before the macro
picture clears up a bit. Til then, stocks will likely remain quite
volatile.
AGILENT TECH (A): Free Stock Analysis Report
DELL INC (DELL): Free Stock Analysis Report
HOME DEPOT (HD): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis Report
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