As President Obama and GOP presidential candidate Mitt Romney were girding their loins for last night’s ultimate presidential debate of 2012, the markets tumbled in the face of sluggish earnings reports for a host of Dow and S&P listed companies.
In fact, Bloomberg News reported that US stocks fell and this pushed the Dow toward its biggest tumble since June. Moreover, an array of commodities stocks also fell, in part because of poor earnings triggered by the one-two punch of the lingering effects of the severe drought in the south and west in the US and sluggish sales.
Commodities prices have also been forced higher as the US dollar continues to slide in the wake of the Fed’s recently announced next round of monetary easing. In addition to the Dow’s tumble yesterday, the S&P Index also slid by 1.6% to its lowest point since early September.
The loss was also attributed to a sluggish earnings season. One market observer, Tom Phelps, reportedly told Bloomberg that “the earnings season has not gone as well as many would like.”
“In general, sales have been disappointing. There’s heightened concern about global growth,” Phelps said.
In sum, more than thirty companies that are in the S&P posted up numbers yesterday and the news was not good across the board. The sluggish earnings were largely attributed to sales that missed analyst forecasts at more than 60% of companies, says Bloomberg. And the retreat was said to be “broad based” as commodity, health-care and financial shares had the biggest losses.
Meanwhile, Federal Reserve head honcho Ben Bernanke continues to spike the punch, so to speak, with a third round of so-called quantitative easing. He continues to cling to the belief that stimulus works by lowering borrowing costs and encouraging investors to seek higher-yielding assets. Unfortunately, it’s not working.
That being said, there are green shoots of optimism on the horizon as the housing market may be turning the corner. But in case anyone has not noticed, other stimulus plays being offered up by the Fed in conjunction with the Obama Administration have failed to revive the limp US economy.
So regardless of who won last night’s foreign policy debate, the main concern of the electorate will be the economy and the math may not add up for Mr. Obama’s re-election campaign.
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Kyle Colona is a New York-based freelance writer and a Feature Writer for CompliancEX and the Wall Street Job Report. He has an extensive background in legal and regulatory affairs in the financial services sector and his work has appeared in a variety of print and on-line publications. You can find him on linkedin.