About RCM Investments strives to grow your money. It is as simple as that. Our philosophy is to strive to stay
up-to-date & connected with the market, empowering us to provide you with the correct knowledge to invest wisely.

For Individuals One of the greatest strengths of RCM is our objectivity when it comes to portfolio construction and
investment selection. Our platform empowers you to achieve your goal of building or preserving wealth.

For Employers RCM Investments strives to grow your money. Our philosophy is to always stay up-to-date and
connected with the market, empowering us to provide you with the correct knowledge to invest wisely.

Contact We are happy to offer you a FREE portfolio review, a FREE retirement plan consultation, or a
FREE 401k plan analysis for employers.

Our Team Meet the people behing RCM Investments. We are dedicated to making your investment experience
comfortable and successful.

Weak Earnings Weigh on Markets

Weekly Update – October 22, 2012

Markets declined for most of the week on disappointing third quarter earnings reports, with the technology sector hardest hit. On Friday, the 25th anniversary of 1987’s stock market crash (known as Black Monday)[1], trading was mostly downbeat as investors digested a string of disappointing earnings reports. In spite of this, markets staged a brief comeback in the last hours of trading to close mixed. For the week, the S&P gained 0.32%, the Dow gained 0.11%, and the Nasdaq fell 1.26%.[2]

Overall this earnings season, Q3 profits have managed to come in just a shade over the doom and gloom estimates. However, the bad news is that top line revenue is much worse than forecasted. One of the big disappointments this week was Google (GOOG), which missed its revenue forecasts for the first time because of its struggling Motorola division and drove a tech selloff on Friday. Market stalwarts GE (GE) and McDonald’s (MCD) also turned in downbeat reports, pushing shares of both companies lower.[3] With about one-third of S&P 500 companies reporting in, a solid 65% have beaten profit estimates, while just 42% have managed to beat revenue forecasts. This repeats the performance we saw in the second quarter, which shows that companies are learning to do more with less while dealing with challenging business conditions.[4]

Not all the earnings news is grim though; banks and consumer discretionary companies such as luxury stores and hotels are expected to report the best growth. Banks were given a boost by Fed actions, and, despite the tough economy, luxury retailers and hotel chains are doing well as wealthy consumers continue to spend.[5]

Next week, analysts will turn their attention to two big economic reports on Friday – the GDP report and consumer sentiment. With remaining earnings reports likely to show more of the same, investors will be looking at the GDP report to see whether the Fed’s QE3 activities are giving the economy the boost it needs. Although we can hope for some solid economic performance, there is a good chance the rest of October will be turbulent for markets.

ECONOMIC CALENDAR:

Wednesday: New Home Sales, EIA Petroleum Status Report, FOMC Meeting Announcement

Thursday: Durable Goods Orders, Jobless Claims, Pending Home Sales Index

Friday: GDP, Consumer Sentiment


[1] http://www.usatoday.com/story/money/markets/2012/10/18/stocks-friday-10-19/1642469/

[2] http://www.briefing.com/investor/markets/weekly-wrap/weekly-wrap-for-october-15-2012.htm

[3] http://www.reuters.com/article/2012/10/19/us-markets-stocks-idUSBRE89E0BC20121019

[4] http://www.cnbc.com/id/49463997

[5] http://finance.yahoo.com/news/dow-down-205-weak-earnings-200703231.html