A Justified Market Slide
Anecdotal evidence certainly suggests that the economy slowed in the second quarter, and certain statistics – most recently, weak retail sales -- are confirming this. Ask your friends and colleagues how the second quarter is going for them. Most will note that, while it hasn't been a disaster, business has not met the expectations set by a strong first quarter. The proximate cause could be any number of foreign influences, be they Europe or China, but a slowing economy would certainly justify the correction the U.S. market has suffered since April 2.
To confirm, I updated the 2012 earnings estimate trend for the S&P 500 operating earnings. As I've pointed out incessantly, the estimate trend is a real driver of returns, both for individual stocks and the market as a whole. Nowadays, however, we must make an important adjustment. Apple (AAPL) is such a large percentage of the index, and the upward drift in their earnings is so robust, that Apple alone can distort the underlying trend in the rest of the index....148 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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