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A Bit of Reassurance Required By the Equities Market

June 28, 2012 | Comments: 0 | Views: 171

Many companies presented reports that were above the expectations of the earnings report consensus, while some were way too low. However, due to the sovereign debt crisis in the euro zone, there has been a lukewarm response by the equities market to the earnings news. This scene has been a familiar one for Europe since many years. But there is more. The emerging markets of China, India and Brazil are facing a dire situation of slowing economic growth and this is the main reason why the equities market are sufficiently perturbed and the public is wary of experimenting with investments.

With the directionless and unsure position that the equities market is placed in today, there is no specific new course of action that can be initiated. Also, it would be foolhardy to throw caution to the winds and experiment with an unknown stock. And as big-cap companies have been providing the kind of dividend income required at this time, it would be better to wait for further news regarding increased dividend payments. This earnings season will definitely see corporate visibility as the vital parameter that determines which way the trader will go. If corporate outlooks are disappointing, the equities market will go down.

The automakers are doing good business and it is reasonably expected that the following quarter will prosper through the industrial economy. How this will affect the retail sector is for us to wait and watch because it is well known that the banking sector is always almost the first to influence the course of the stock market. This earnings season may not bring very glad tidings and institutional investors do not presume that there will be a very big reacceleration in growth, but a bit of reassurance from corporations would be surely welcome.

Railroad stocks also play a pivotal role in determining the direction of economy and the equities market. So do the retail sectors. The state of the U.S. economy very much depends upon the railroad and retail sectors, which in turn gives a general idea about the industrial and consumer economies. Towards the middle of July this year, the figures of the railroad stocks will be known. As the diesel fuel costs have been going down, it is assumed that railroad companies may spring some surprises. The general trend is that when railroad companies are doing good business, the stock market looks positively poised.

The stock market continues to have a very fair valuation, which looks quite good for the economy. Fairly valued stock prices greatly affected the stock market's recent correction. There are still many doubts in the minds of the investor, so if the equities market is to advance in the latter part of 2012, it will require to be assured of the economic growth in the forthcoming period.

With Profit Confidential you are receiving the news with the opinions, commentaries and interpretations of seasoned financial analysts and economists. Meet our website:

Source: EzineArticles
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