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BUSINESS A25
Saturday 21 November 2015
Corporate America’s problem: Falling profit, revenue
MARLEY JAY money, as several thorny In this Feb. 13, 2015, file photo, stacks and burn-off from the Exxon Mobil refinery are seen at dusk
AP Markets Writer problems continue to net- in St. Bernard Parish, La.
NEW YORK (AP) — Corpo- tle Corporate America.
rate America has a profit The strong dollar makes Associated Press
problem. U.S company it much harder for U.S.
earnings are falling for the companies to compete in ering economy will mean maker Activision, health such a fast pace. Many
first time since 2009, when overseas markets; slowing equally good results for all care companies and con- companies have been
the economy was still reel- growth in other countries, good U.S. companies. For sumer giants like Netflix and growing by making acqui-
ing from the Great Reces- especially China, means example, $1,000 invested Amazon are helping to sitions rather than investing
sion. weaker exports; and in the in an index of S&P 500 en- make up for the losses at in their own businesses. That
The main culprit is the last week several big retail- ergy stocks at the begin- energy and mining com- has helped put corporate
plunging price of oil, which ers like Macy’s and Best Buy ning of the year would be panies. This quarter, earn- deals at more than $3 tril-
has decimated earnings at have reported weak sales worth about $866 today, ings per share for consumer lion so far this year, accord-
big energy companies like and poor outlooks for the while the same amount in discretionary companies ing to Dealogic. That’s al-
Exxon Mobil and Chevron. holiday shopping season. the S&P 500 index would be rose 16 percent and prof- ready a record for an entire
Mining companies have This has a contributed to a worth $1,015. its for telecommunications year, with six weeks left to
also taken a beating be- trend that concerns some That’s not to say, with results and health care compa- go in 2015.
cause of tumbling prices for even more than feeble now in from 473 of the com- nies grew 15 percent, ac- The barrage of deals has
gold, silver and copper. profits: Revenue for S&P 500 panies on the S&P 500 in- cording to S&P Capital IQ. helped to lift stock prices,
Earnings at energy com- companies has shrunk in dex, that the earnings news But the skid in profits and but once the merger frenzy
panies dropped a stag- all three quarters so far this is all bad. Big profit gains at sales helps explain why U.S. abates, so too could the
gering 59 percent in the year. Alphabet, Google’s parent companies have been positive effect on the stock
third quarter, enough to In the past, U.S. companies company, the video game buying each other up at market.q
drag overall profits for com- have been able push their
panies in the Standard & earnings per share higher
Poor’s 500 index down 1.5 even with lower revenue
percent, according to es- by slashing costs, cutting
timates by S&P Capital IQ. jobs, and spending huge
That marks the first quarterly amounts of money, often
decline in six years. Without borrowed at cheap rates,
the drag of energy compa- to buy back their own
nies, overall earnings would stock. It stopped working
be up 6.2 percent. this quarter.
To be sure, earnings are “We’re at the point where
still high by historical stan- we can’t get any more
dards, and the U.S. econ- blood out of the stone,”
omy is continuing to slowly says Kristina Hooper, U.S.
improve. But with stock in- investment strategist for Al-
dexes near record highs, lianz Global Investors.
the weak earnings make As a result, investors are
many stocks vulnerable to going to need to be a lot
declines. And energy com- more selective about what
panies aren’t the only ones stocks they buy and not
having trouble earning just assume that a recov-
Stocks march higher, ending
their best week so far this year
MARLEY JAY day’s terrorist attack in ficer at Wells Fargo Private In this July 6, 2015 photo, American flags fly at the New York
AP Markets Writer Paris. Instead, investors re- Bank. Stock Exchange on Wall Street.
NEW YORK (AP) — The stock sponded to signs the U.S. Davidson said investors
market closed out its best economy remains strong. have slowly gotten used to Associated Press
week of the year Friday as The Dow Jones industrial the idea that the Federal
big gains by retailers and average rose 91.06 points, Reserve is going to raise in- pummeled this month after the research firm Retail
technology companies or 0.5 percent, to 17,823.81. terest rates. That prospect weak reports from Macy’s Metrics, said shoppers are
pushed major indexes up- The Standard & Poor’s 500 worried them greatly a and Nordstrom caused in- looking for discounts and
ward. index added 7.93 points, few months ago, but now, vestors to worry that the turning to lower-priced re-
Stocks faded as Friday or 0.4 percent, to 2,089.17. stocks are rising because holiday shopping season tailers like TJ Maxx and Ross
wore on, but they still fin- The Nasdaq composite in- investors are taking heart would be a bust. But some Stores and to “fast fashion”
ished higher. The S&P 500 dex gained 31.28 points, that the Fed believes the retailers are doing well. retailers who keep up with
index climbed almost 3.3 or 0.6 percent, to 5,104.92. economy is on solid foot- Ken Perkins, president of the latest trends.q
percent this week. By just The Dow turned positive for ing. Meanwhile, new eco-
a hair, that was its biggest the year by a fraction of a nomic stimulus in Europe
weekly gain in 2015. point. could strengthen the glob-
Stocks climbed Monday “Throughout the week we al economy.
and Wednesday as the got more and more news Retailers rallied after solid
U.S. market didn’t seem that the Federal Reserve earnings reports from dis-
to be affected by a string was assessing the econo- count chain Ross Stores
of unsettling international my favorably,” said Erik Da- and footwear seller Foot
events, including last Fri- vidson, chief investment of- Locker. Retail stocks got
