A lot of investors think that oil prices will determine what happens to the stock market over the next quarter, and for the most part, that is right.
The world's largest conglomerate will report earnings next week. It has operations in almost every country in the world. It has divisions in entertainment, infrastructure, medical devices, jet engines, plastics and financial services. And that is just a partial list.
If General Electric (NYSE:GE) posts poor numbers it will be hard for the market as a whole to believe that the economy is going anywhere but down. According to Reuters, "Aside from second-quarter results, investors are anxious to see the companies' forecasts for world economic growth and their own corporate sales prospects."
It is hard to imagine that one company could set the tone that would influence how stocks may trade for several weeks, but GE does a great deal of business in Asia. Growth in that region is viewed as a salvation for large American companies.
GE also has a huge financial services arm. If it takes large write-downs, it may well be a sign that the credit crisis is growing.
GE. GE. GE.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
7-04-2008 @ 2:20PM
speculator said...
Ge is a great company. It will probably see a bounce from the earns report but it is down 31% in the last year. Everyone likes to talk about stock for the long run, but between 1966-1981 they went nowhere. Sometimes they go down for long periods.
www.theinvestingspeculator.com
7-04-2008 @ 3:12PM
Sheldon L said...
We already know the answer Doug. China and India have slowed down. Financial companies have more write-downs to wring out of their systems. Airlines are canceling orders. Governments are pulling back on infrastructure projects. Oil prices are trampling industry cost structures.
It would be a great surprise if GE earnings do not reflect these issues. They might report optimism 3 or 4 quarters out.
7-04-2008 @ 4:41PM
Kent said...
It's hard to imagine GE falling off the cliff as many mislead doomsayers are touting. Its core businesses are intact while shedding unprofitable businesses in the process (i.e. appliances). Sure their stock prices have been in the doldrums but I believe GE is going through a re-identification process. G.E.'s strength lies in its corporate management culture creating multiple profit centers holding its managers accountable and the decision-making process from the bottom-up provides a unique company that only a few companies are able to emulate. I suspect Mr. Immelt has been given another two - year window to get this fine company back on track.
7-05-2008 @ 2:21AM
gumbo koontz said...
Our economy has gone to the dipsticks! We are yet to dump oil stocks and move to solar stocks in any big way. We clung to oil stocks with full knowledge that we will have shortages that will jack up prices. So why bother looking elsewhere?? This is the trouble with squirrel investors!! We ought to go to greener pastures and grow there instead of clinging to sooty fossil fuels like oil, coal, cigarettes, charcoal, etc.... America stopped building a long time ago and is living off our grandaddies' chumpin' times!!