Investors already have a cautious stance in the market amid growing fears about the world's biggest economies, and Monday's Alcoa (NYSE: AA) earnings report didn't help.
The aluminum producer, which always kicks off the earnings season, delivered more of a punt than a kickoff. The Dow bellwether reported an 81.3% drop in profits, as the global slowdown and production cuts weighed on profits.
Reporting after Monday's market close, Alcoa said income from continuing operations came in at $61 million, or 6 cents a share, on revenue just a hair under $6 billion. While significantly lower than the same period a year ago, the lackluster results still managed to beat Wall Street's tepid expectations (analysts were looking for 5 cents on revenue of $5.8 billion).
Chairman and CEO Klaus Kleinfeld said in a statement following the earnings release, "Alcoa maintained revenue strength amid solid liquidity by driving high profitability in our mid and downstream businesses and by reducing costs and improving performance in our upstream businesses."
Contributing to the profit decline was a global glut resulting from stagnant and slowing growth in many areas around the world, especially China.
Earnings Season Begins in the Stock Market Today
Friday's negative jobs report is hanging over the stock market today as the markets opened lower Monday morning. Investors will look to corporate earnings of major companies this week as the second-quarter earnings season unofficially begins.
Even though some major companies such as Research in Motion Ltd. (Nasdaq: RIMM) and Nike Inc. (NYSE: NKE) have recently announced earnings, Alcoa (NYSE: AA) unofficially kicks off the market's second-quarter earnings.
Investors hope that earnings do not follow the disappointing trend set by RIMM and NKE, but many other companies have already issued lower guidance for the upcoming quarter. This does not bode well for the economy which is trying to shrug off manufacturing, jobs and consumer confidence reports that all point towards "Recession 2013."
Many analysts expect earnings to be weak across the board. Corporate profits are starting to feel the sting of economic concerns overseas and at home.
Later this week JPMorgan Chase (NYSE: JPM) and Well Fargo (NYSE: WFC) report their earnings as well as Google (Nasdaq: GOOG).
Troubles in Spain continue to impact the confidence of investors as the yield on the Spanish 10-year bond crossed the 7% mark again.
Along with Alcoa here are some other companies in the news today.
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Second-Quarter Earnings Prove "Glocal" Companies are the Best Investments
The second-quarter earnings season has delivered some healthy activity, but the true standouts are the big U.S. companies that have learned to profit from emerging markets.
These are what Money Morning Chief Investment Strategist Keith Fitz-Gerald refers to as "glocal" companies - firms that have a global and local presence. And they offer investors a way to profit from emerging-market growth, while also safeguarding against turbulence at home.
Indeed, as U.S. debt issues continue to weaken the U.S. dollar, "glocal" companies are profiting from increased exports, selling to markets like China and India and their growing middle class.
So, let's look at some of the most promising prospects.
Earnings Season Shows Boost in Profit from Emerging MarketsSo far this season, earnings at companies in the Standard & Poor's 500 Index are the highest they've been in four years, according to S&P analyst Howard Silverblatt. About 75% of companies that have reported have exceeded analysts' expectations, and many raised earnings' forecasts for the rest of the year.
Earnings per share are up 19% from a year earlier for the 122 S&P companies that reported earnings as of July 22. And much of the increase is from companies with strong exposure to emerging markets.
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