By Tom Hudson, McClatchy Newspapers –
Another season of earnings reports from corporate America begins in the week ahead. But despite a rebirth of manufacturing, easy money from the Federal Reserve, and a bevy of new jobs, don’t expect much gusto from company profits, especially those from overseas.
For the better part of a year, investors have enjoyed double-digit earnings growth. It’s one of the reasons the S&P 500 hit a post-recession high in early April. But it’s becoming much harder to shine in comparisons to a year ago. In the first quarter of last year, companies in the S&P 500 stock index saw profits shoot up almost 20 percent. This year, those earnings are forecast to rise less than 1 percent.
Among the bellwether companies reporting first-quarter results this week are Alcoa Inc. and JPMorgan Chase & Co. One is at the nexus of the global demand for materials used by builders and beverage companies, airplane and auto makers. The other is a giant of international high finance as well as Main Street banking. Both are expected to have earned less than last year. In fact, Alcoa is predicted to have lost money in the first three months of the year.
For these multinational behemoths, Europe has been a big drag as it has slipped into recession. Emerging markets, such as China, also have slowed down. But how their U.S. operations are behaving will give us a good indication of the shape of our hometown economies. Investors may think global, but they spend local.