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Alcoa Earnings Report Uneasy Start to Second Quarter (NYSE: AA)

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.

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Alcoa (NYSE: AA) Kicks Off First Quarter Earnings Reports That Could Put Brakes on Market Rise

Investors will get a front row preview to the first quarter earnings season when bellwether Alcoa Inc. (NYSE: AA) reports its results Tuesday after the close.

The aluminum producer is the first major U.S. company to release its first quarter earnings report, and these closely watched results often set the tone for the earnings season.

But investors shouldn't get their hopes up - expectations for first quarter earnings are low.

Earnings growth for the first three months of 2012 was lackluster at best - even though the stock market produced some of the best quarterly market gains since 1998. The Dow rose some 8%, the Standard & Poor's 500 Index gained 12%, and the NASDAQ nearly climbed a whopping 19%.

If this latest batch of earnings comes with a plethora of nasty and unwelcome surprises, the recent market rally could be derailed.

Sam Stovall, chief equity strategist at S&P Capital told the Associated Press, "It's supposed to be a very weak quarter, but Wall Street is freaking out because they don't understand why."

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Why Upbeat Earnings Reports Mean Caution to Investors

While earnings reports continue to pour out each day, investors should be careful before being excitedly swayed by strong financials - there is much more of the big picture to consider.

Stocks failed to get traction in the middle of last week after Alcoa (NYSE: AA) and Intel (Nasdaq: INTC) earnings reports underwhelmed investors, and Friday they spun off the road. The culprit: Fears that recent earnings gains represented a peak, and that weak readings on the economy were more representative of current conditions.

Retail sales disappointed and the Federal Reserve cut its 2010 growth forecast. Even word that Singapore grew at a record pace of 19.3% in the second quarter couldn't lift the air of despondency on Wall Street. 

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Alcoa Earnings Surprise is Positive News for Global Economic Recovery

When Alcoa Inc. (NYSE: AA) kicked off earnings season on Monday by soundly beating analysts' expectations, it flashed positive signals for the company and, more importantly, the entire global economic recovery.

The aluminum giant swung from a loss of $0.26 in the same quarter last year to a gain of $0.13 per share, exceeding by 18% the 11-cent average estimate of 17 analysts surveyed by Bloomberg News.

"It's a very positive signal for economic growth and the stock market generally," John Stephenson, who helps manage $1.6 billion including Alcoa shares at First Asset Investment Management in Toronto, told Bloomberg. "Maybe end-use demand has not been destroyed. That's a very good sign and a great way to start off this Q2 earnings season."

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Why Fourth Quarter Earnings Season Will Bode Well for Stocks

As earnings season kicks into high gear in the coming weeks, many analysts expect an abundance of good news, mostly because earnings last year were abnormally low. And that bodes well for investors.

For the first time since the second quarter of 2007, earnings of stocks in the Standard & Poor's 500 Index should be higher than they were the year before. That would break the longest losing streak since S&P began keeping track of operating earnings in 1991.

"It's going to be on the plus side again," James Swanson, chief investment strategist at MFS Investment Management told The Wall Street Journal.

Investment News Briefs

Alcoa Narrows Loss, Misses Estimates; Financial Services Fee Part of Obama's Budget Plan; China's Exports Grow For 1st Time in 13 Months; Google Slammed With Complaints on Nexus One Phone; Femsa Sells Beer Franchise To Heineken; IRS Set to Audit Harvard's Investments

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Investment News Briefs

With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world. Alcoa Earnings Rallies Stock; Retailers Post Strong September; Initial Jobless Claims Hit 9-Month Low; ECB and BOE Leave Rates Unchanged; PepsiCo Beats 3Q Estimates; CEO: China Auto Market to Cool; […]

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The Five Stocks to Watch This Week

The earnings season beginning today (Tuesday) is shaping up to be an important one, as it could have a significant impact on a struggling stock market rally. Since the stock market rally reached a pinnacle nearly two weeks ago, the Dow Jones Industrial Average has lost about 3.3% while the Standard & Poor's 500 Index […]

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Upbeat Earnings Will Fuel the Bull Market's Next Leg

When it comes to the health of the U.S. stock market over the next few weeks, corporate earnings will tell the story. Alcoa Inc. (NYSE: AA) kicks off the third-quarter earnings season on Wednesday. My guess is that over the next few weeks, as third-quarter earnings are reported, we will have the opportunity to witness […]

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U.S. Trade Deficit Widens, but Signals a Healthier Economy

The U.S. trade deficit expanded at its fastest pace in more than ten years in July, accelerated by rising oil prices and increased demand for auto parts and industrial supplies. The gap between imports and exports rose 16% – the largest percentage increase since February 1999 – to $32 billion in July from a revised […]

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Aluminum Giant Alcoa Awarded Major Parts Contract for New Stealth Jet

By William Patalon III Managing Editor Money Morning/The Money Map Report Defense contractor Lockheed Martin Corp., (LMT) has awarded aluminum giant Alcoa Inc.(AA) a $360 million contract to supply special castings for the special new stealth fighter jet known as the ‘Joint Strike Fighter.' The U.S. military will use the Lockheed Martin F-35 Lightning II […]

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Analysts Wondering About Alcoa's Next Move

Dow Jones Industrial Average From Staff Reports Just what motivated Alcoa Inc (AA) to dump its stake in China's biggest aluminum company this week is not clear, but the $1.8 billion cash infusion should appease suffering stockholders while giving the aluminum giant maneuvering room. It’s only been a few months since Alcoa's hostile attempt to buy Canadian rival Alcan […]

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Foreign Markets Thrive; U.S. Closes With A Thud

By Jason Simpkins Central banks continued funneling cash into the world’s wounded financial systems Monday, the latest in a series of liquidity infusions that began last week. The European Central Bank offered another $65 billion in emergency funds, while the Bank of Japan injected $5.1 billion. The Federal Reserve again came in on the low end […]

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