Equity markets ended the third quarter with their biggest losses in four months, and we're now staring down the closing months of 2009. Half the quarter, of course, is dominated by holiday sales, which ups the stakes at the finish line and sets the tone for the bulk of 2010.
Even though company performances have been fairly strong through this reporting season, it's tough to shake the nerves associated with depressed consumer spending and high unemployment.
For the third quarter, close to two thirds of the companies in the S&P 500 index have reported and around 80% of them have beaten profit expectations, according to Thomson Reuters. Much of this is coming from cost cutting, as revenues are still strained. In Late September and early October, the good news moved the markets, but investors expect it now, so we're stuck with only the downside when companies miss, and no love when they meet or beat.
This week will be interesting, with monthly sales results expected from both retailers and auto manufacturers. We also have several big players releasing their third quarter results, including Cisco Systems (NASDAQ: CSCO), Kraft Foods (NYSE: KFT), Starbucks (NASDAQ: SBUX) and Time Warner (NYSE: TWX).
With the possibility of a schizophrenic market for the next three months, Curtis Teberg, portfolio manager at Teberg Fund, notes that in the past 50 years, the combined returns of November and December have been positive 85% of the time.
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