Fragility aside, recovery by big US names appears to rule out double-dip recession
Friday 23 July 2010
A slew of the world's biggest companies reported beating forecasts for sales and profits, giving lie to fears that the global economic recovery is already faltering.
Stock markets leapt higher as investors picked through scores of earnings reports from numerous sectors of the economy and while executives expressed caution and noted uncertainty over the future, few predicted a double-dip recession. The fragility of the economic recovery was again under discussion on Capitol Hill yesterday, where US lawmakers were questioning Ben Bernanke, the chairman of the Federal Reserve, for a second day of his twice-yearly report to Congress.
On day one, the central bank boss had warned that the outlook was "unusually uncertain", but he did not depart from his prediction that the US economy will continue to grow modestly. The Dow Jones was up more than 2 per cent by lunchtime in New York, more than erasing the drop that Mr Bernanke's testimony had caused on Wednesday. Traders were heartened by the results emerging from global corporations such as Caterpillar, the heavy equipment maker, 3M, and the airline industry.
Caterpillar's chief executive, Doug Oberhelman, said sales were so strong the company was on track to beat Wall Street's forecasts for the rest of the year, too. "While there are significant economic concerns around the world that we are watching closely, orders have continued to out-pace our shipments and we expect to increase production in the second half of the year," he said.
3M, an industrial conglomerate with operations spanning adhesives, plastics and electronics, but which is still most famous for the Post-it note, also raised its guidance. George Buckley, its chief executive, said: "There will be a period of slower growth in end markets later this year. This isn't a double-dip per se, it's just a soft spot and very normal as economic growth takes a breather for a while."
UPS, the shipping company, whose business activity reflects the strength or otherwise of economic activity, said it had almost doubled profits in the second quarter. And Continental, whose impending merger with United Airlines will turn it into the largest airline in the world, became the latest company from that sector to blow through Wall Street forecasts.
Its revenue jumped 19 per cent to $3.7bn (£2.4bn) as passenger numbers grew and its cargo business also showed a recovery. JetBlue and Alaska Air, smaller rivals of both airlines, also beat expectations on the top and bottom lines.
The positive momentum for earnings was broken last night, however, when Amazon announced second-quarter profits had fallen far short of hopes. The online retailer's operating costs rose sharply, even as it had to slash the price of its Kindle e-reader device to fend off competition from Apple. Amazon shares slumped 13 per cent in after-hours trading.
- 1 The political parties aren't all the same – which means 2015 will be a 'big-choice' election
- 2 President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
- 3 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 4 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
UK weather: Warning for more snow and ice as freezing temperatures and gales hit Britain
Three killed at South Korean nuclear reactor days after hackers target country's atomic agency
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Immigrants make UK racist, says Ukip councillor Trevor Shonk
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
Katie Hopkins speaks out on childhood obesity: 'Parents of fat children should be prosecuted for child cruelty'
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...