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Real Time Insight

Corporate profitability has been a standout performer in this earnings cycle, with double digit growth in the last eight quarters. This earnings momentum has served as a key source of support for the stock market.

But all cycles eventually mature and turn around. This earnings cycle appears to be maturing in a backdrop of growing anxieties about the global economy. Europe is heading towards a recession and the extent of the Chinese slowdwon remains uncertain.

With about 40% of the earnings for the S&P 500 companies coming from international markets, it is doubtful that this worldwide slowdown will have no negative impact on corporate earnings.

Are the recent profit warnings from companies like DuPont (DD), Texas Instruments (TXN), Intel (INTC) and others pointing towards a materially deteriorating earnings picture? Or we can chalk all of these off to company specific issues unrelated to each other? 

 I don't think the earnings picture is materially deteriorating, but what do you guys think? Are current consensus earnings expectations adequately reflecting this worldwide slowdown?

Zacks Releases Their 7 Best Stocks for August, 2014

These 7 were hand-picked from the list of 220 Zacks Rank #1 Strong Buys with earnings estimate revisions that are sweeping upward. Their stock prices are expected to rise sooner than the others.

Today, this Special Report is available to new Zacks.com visitors free of charge.

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