US stock market is having an early, ugly day after disappointing earnings reports and guidance from not only US companies, but also many European companies as well. It’s the guidance aspect that appears to be most troubling to analysts and investors alike as CEO’s cut forecasts and state three items of concern: Chinese growth, European recession, and US fiscal cliff.
CNBC carries a cautionary tale of woe on guidance citing GS’ David Kostin.
“Of the 20 companies in the S&P 500 that have provided guidance for the fourth quarter during the current earnings reporting season, 18 have slashed their forecasts, according to Goldman Sachs….That’s a 90 percent negative run rate that many investors and analysts have never seen before….Although guidance tends to be downbeat, this is especially negative,” wrote Goldman’s David Kostin, in a note to clients over the weekend. The strategist sees this negativity leading to a 14 percent drop in the S&P 500 this quarter.”
