may now be the most difficult to predict the future trend of the US stock market period. Although there are numerous factors that are gathering a strong headwind, or will damage the companys profitability and future growth, but the overall stock investors are ignoring these warning signals, chose the more optimistic attitude.
Therefore, if you are skeptical about the one-sided market optimism, you can find clues from major industrial stocks, they can provide early warning signal when the situation deteriorated. By the following two industry giants, we can understand the recent strength of the market or whether supported by economic fundamentals.
1,3M Company: business units are not optimistic about the
one of the worlds largest industrial group 3M Company (NYSE: MMM) shares after peaking in early 2018, is still in a bear market in. Since January 2018, the stock has fallen more than 23%, and the possibility of recovery in the short term unlikely. Since the beginning of 3M fell 8.5 percent on Friday to close at $ 173.22.
company, based in Minnesota industrial giants, products made from Post-it stickers to facilitate air filter, ranging from touch screen. 3M in April to disclose financial results, performance dropped less than expected, the most recent record. First quarter sales fell 5% to $ 7.9 billion. Adjusted profit also fell, the company also lowered its outlook for this year.
all levels weakness, indicating that demand for 3Ms industrial products subject to many hit all five business units operating profit has declined.
due to the slowdown in demand for smart phones, 3M electronics sector (manufacturing LCD screen films and other products) sales fell nearly 12%. And as automakers cut production and inventory, the companys automotive division also suffered heavy losses. In response to this sharp slowdown, 3M also tighten their belts and reduce 2,000 jobs, it also shows that the recovery will not come quickly.
For the quarter that ended in June, analysts expect earnings per share fell 19 percent to $ 2.09 on sales of $ 8.04 billion expected.
2 Caterpillar: "economic barometer" early warning
mining and construction equipment manufacturer Caterpillar (NYSE: CAT) shares being under pressure as market participants worriedThe company can not escape the impact of economic slowdown. Although the stock has risen since January by 6.6%, Friday to close at 133.9 US dollars, but fell more than 4% over the past year, and the outlook does not look optimistic.
In a recent earnings report, Caterpillar said that the stock is increasing, while profitability is limited by declining market share in the Chinese market and "aggressive pricing" policy impact.
UBS lowered in a recent report, the Caterpillar rating on the stock, saying the company has more than half of the terminal market will reach "peak" in 2019, "With the decline in demand, in 2020 Caterpillar poor prospects for earnings and profits under pressure. "
always been regarded as a barometer of the economy, in line with International Monetary Fund (IMF) and the OECD (OECD) latest global economic forecast . Given the geopolitical tensions and trade, the two institutions have cut growth forecasts for the major economies in 2019.
3M and Caterpillar warning the two largest industrial company to issue this year show that the recent strong performance of the US market, the lack of depth, mainly driven by interest rate expectations. Defensive stocks (such as utilities, consumer staples and real estate) rebounded strongly supports this view. When the outlook is uncertain, investors tend to flock to these plates.
can be seen, the current market rally is based on an unstable, unless there are signs that industrial stocks and other cyclical sectors also participate in this round up of them. In this uncertain environment, investors should proceed with caution.
(Source: Flush official website, invasion deleted)
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