Markets remain closed for a second day on Tuesday due to
Hurricane Sandy, with published accounts putting the preliminary
estimates of the storm's total cost at close to $20 billion. In
addition to insured losses, this cost estimate would include
damage to power lines and other infrastructure.
The estimated insured losses of $5 billion to $10 billion will
put Sandy in the Top 10 category of most expensive hurricanes in
the country's history. Last year's Hurricane Irene cost the
insurance industry in excess of $4 billion. Given the relatively
uneventful hurricane season this year before this storm, the
insurance industry is in fairly good shape to absorb
Sandy-related losses.
While it's quite early at this stage, the storm will likely have
some stimulative economic effects for the region as well, as
homeowners, businesses and local governments repair storm damage
in the coming days. The net effect on the retail sector may have
been a wash, with heavy sales ahead of the storm offsetting the
impact of the shutdowns.
In the ongoing third quarter earnings season, a number of
companies scheduled to report results today had to delay the
announcements. Major companies in this category include
Automatic Data Processing
(
ADP
),
Avon Products
(
AVP
),
Cummins
(
CMI
),
Pfizer
(
PFE
). But many others are sticking to their published schedules and
coming out with third quarter results. The better-than-expected
results from
Ford
(
F
) and
Archer Daniels Midland
(
ADM
) this morning would fall in that category. Ford's results are
particularly impressive, with North American strength offsetting
European weakness, resulting in a top- and bottom-line beat.
As of this morning, we have third quarter results from 285
companies in the S&P 500, or 57% of the index's total
membership. Total earnings for these 285 companies are down 2.4%
from the same period last year, with 62.8% of the companies
beating earnings expectations. Total revenues are down 2.1% from
the same period last year, with only 37.2% of the companies
coming out with positive revenue surprises.
Excluding Finance, total earnings and revenues are down 4.3% and
2.7%, respectively. The composite growth rate for the third
quarter, where we combine the reported results with those still
to come out, is for a decline of 0.7% (down 4.6% excluding
Finance).
Estimates for the fourth quarter and beyond have started to come
down as companies have guided lower, but they still remain
elevated. Total earnings in the fourth quarter are expected to be
up 4.9%, which is down from almost 8% before the third quarter
reporting season got underway.
ARCHER DANIELS (ADM): Free Stock Analysis
Report
AUTOMATIC DATA (ADP): Free Stock Analysis
Report
AVON PRODS INC (AVP): Free Stock Analysis
Report
CUMMINS INC (CMI): Free Stock Analysis Report
FORD MOTOR CO (F): Free Stock Analysis Report
PFIZER INC (PFE): Free Stock Analysis Report
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