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Earnings Preview is written by Charles Rotblut, CFA, Senior Market Analyst for Zacks.com.
As I write this on Friday morning (Oct 3), there is scuttlebutt that several central banks could announce rate cuts on Monday morning. Though the rumors are unconfirmed, fed fund futures are pricing in a significantly higher probability of a half-point cut occurring at the late-October meeting.
Alcoa (NYSE: AA) will "officially" kick off earnings season when it reports on Tuesday afternoon. The aluminum maker is expected to announce profits of 60 cents per share.
Joining AA throughout the week will be fellow S&P 500 members: Costco (Nasdaq: COST), Chevron (NYSE: CVX), General Electric (NYSE: GE), and Monsanto (NYSE: MON).
The minutes from the September Fed meeting will be released on Tuesday afternoon. If a rate cut is announced on Monday morning, the significance of these minutes would be reduced. Nonetheless, the notes will be scrutinized for anything that could unnerve traders or give them hope that things are better than thought.
The week's key economic data will include:
-- Tuesday: August consumer credit, Fed minutes
-- Wednesday: August pending home sales, weekly crude inventories
-- Thursday: September import and export prices, weekly initial jobless claims
-- Friday: August trade balance
Fed Chairman Ben Bernanke is scheduled to speak at the National Association of Business Economics' annual meeting on Tuesday afternoon. He will discuss the economy and financial markets.
Yom Kippur, the Jewish day of atonement, starts Wednesday at sundown. This should result in lower volume on Thursday. The Stock Trader's Almanac says buying on Yom Kippur and selling at the start of Passover has been a profitable strategy.
Companies That Could Issue Positive Earnings Surprises
This past Thursday, Monsanto (NYSE: MON | Quote | Chart | News | PowerRating) boosted its fiscal 2008 earnings outlook for the second time in as many months. MON cited strong performance from its Roundup business as the reason for the recent bullishness.
Brokerage analysts accordingly narrowed their fiscal fourth-quarter projections to a loss of 12 cents per share from a previously forecasted loss of 16 cents per share. The most accurate estimate is more bullish at a loss of 10 cents per share. Monsanto is scheduled to report on Wednesday, Oct 10, before the start of trading.
Companies That Could Issue Negative Earnings Surprises
General Electric (NYSE: GE | Quote | Chart | News | PowerRating) recently cut its profit guidance, as volatility in the credit markets hurt its finance arm - GE Capital. The division contributes about 45% to GE's earnings. All of the covering brokerage analysts lowered their profit estimates, sending the third-quarter consensus earnings estimate down to 45 cents per share. The Zacks #4 Rank ("sell") company has missed consensus in 2 of the last 4 quarters. GE is scheduled to report on Friday, Oct 10, before the start of trading.
Charles Rotblut, CFA, is the senior market analyst for Zacks.com.
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Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank stocks have generated an average annual return of +30%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 81% annually (+2 % vs. +11%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.
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Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
SOURCE: Zacks.com
Zacks.com Charles Rotblut, CFA Phone: 312-265-9352 Email: pr@zacks.com Visit: www.Zacks.com
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