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FirstAlert(tm) Daily 10/8: Earnings Anxiety

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October 8, 2009 (FinancialWire) (By Philip Holmes) — Stocks finished mixed on Wednesday. Investors await third quarter earnings news, and there are worrying portents. The financial sector might improve, but will this be due to a few large turnarounds like AIG (NYSE: AIG)?

The Dow Jones industrial average finished the trading session at 9,725.58, down ended 5.67 points, while the Standard & Poor’s 500-stock index saw a 2.86 point rise overall, ending at 1,057.58. The Nasdaq composite index rose 6.76 points, to 2,110.33.

Investors took in one good piece of news after the bell: Aluminum maker Alcoa returned to profit. The company reported a $77 million third-quarter profit, or 8 cents per share. Alcoa’s news came as a surprise, and a welcome one, after three straight quarterly losses.

But, as BusinessWeek’s Ben Steverman reports, there may be “less than meets the eye” in the third quarter earnings season. As Ben puts it, “The economy may be recovering, but many investors still expect mediocre corporate profits in the third quarter.”

Among financials, Steverman points out that one company’s big turnaround might put a halo over the sector. Insurer American International Group is expected to (almost) break even after posting a loss of nearly $10 billion a year ago.

According to Steverman’s report, “With AIG included, financial sector earnings are expected to jump 57%, according to Thomson Reuters. Without AIG, analysts say financial earnings will fall 29%.”

Whether this proves to be the historically significant earnings season analysts expect will have everything to do with how investors interpret weird, often contradictory statistics.

[Go to http://www.financialwire.net/?s=philip+holmes to see more commentaries by Philip Holmes.]

FirstAlert(tm) “Money Index” is an indicator of the depth of market direction or indirection. While not always including the same stocks, the NYSE/NASDAQ/AMEX 25 Most Actives and NYSE/NASDAQ/AMEX greatest Percentage Losers and Percentage Winners (weighted against pure monetary loss/gain) indicate the direction in which the mass of money is flowing, as well as the general focus of the market. Of the Most Actives, last session’s trading showed 17 advancers versus 8 decliners. Volume leaders were led by the E-Trade Financial Corp. (NASDAQ: ETFC) trading 40,760,227 shares closing at $1.69 (down 0.6%), the PowerShares QQQ Trust Series 1 (NASDAQ: QQQQ) trading 38,100,441 shares closing at $42.06 (up 0.3%) and the SPDRS Trust ETF (NYSE: SPY) trading 29,423,739 shares closing at $15.09 (up 0.3%). Of last session’s Greatest Percentage Losers, stocks taking the greatest monetary losses were led by Barclays PLC (NYSE: BCS) trading on volume of 26,400 shares (losing $7.224 billion), AirTran Holdings Inc. (NYSE: AAI) trading on volume of 4,130,500 shares (losing $93.1 million) and Scottish RE Group Ltd. (NYSE: SCT) trading on volume of 177,400 shares (losing $15.0 million). Of last session’s Greatest Percentage Winners, stocks making the greatest monetary gains were led by Labopharm Inc. (NASDAQ: DDSS) trading on volume of 1,502,106 shares (gaining $29.4 million), Pacific Capital Bancorp (NASDAQ: PCBC) trading on volume of 614,312 shares (gaining $16.5 million) and Repros Therapeutics Inc. (NASDAQ: RPRX) trading on volume of 6,115,770 shares (gaining $14.7 million). [Go to http://www.financialwire.net/?s=%22%27Money+Index%27+Synopsis for all the most recent FirstAlert(tm) "Money Index" Synopses.]

The FirstAlert(tm) Economics Calendar lists Chain Store Sales for September, Initial Jobless Claims (8:30 a.m.), Wholesale Inventories for August (10 a.m.), Treasury auctions 30-year bonds (1 p.m.).

The FirstAlert(tm) Events Calendar showcases  GROW @ Jefferson Companies New Orleans Investment Conference.

FirstAlert(tm) Website of the Day: http://www.myrecipes.com

Quote of the Day: “I hear that melting pot stuff a lot, and all I can say is that we haven’t melted.” Reverend Jesse Jackson

Today is: Day of Independence in Croatia, World Sight Day.

Happy Birthday: Walter Kittredge, Otto Heinrich Warburg, Edward Rickenbacker, Frank Herbert, Rona Barrett, Paul Hogan, Jesse Jackson, Chevy Chase, Dennis Kucinich, Sigourney Weaver, Stephanie Zimbalist, CeCe Winans, Matt Damon, Angus T. Jones.

Today in History: Because of the implementation of the Gregorian calendar this day does not exist in 1582 in Italy, Poland, Portugal and Spain. San Marino, a nation renouned for its beautiful postage stamps, adopted its written constitution in 1600. The Second Opium War between several western powers and China began in 1856 with the Arrow Incident on the Pearl River. Four major fires broke out on the shores of Lake Michigan in 1871 in Chicago, Illinois (The Great Chicago Fire); Peshtigo, Wisconsin; Holland, Michigan; and Manistee, Michigan. Melville Fuller was sworn in as the eighth Chief Justice of the United States in 1888. Boston Bruins defenseman Billy Coutu became in 1927 the first hockey player to be suspended for life from the NHL after he started a brawl in Game 4 of the 1927 Stanley Cup and punched referee Jerry LaFlamme. The radio show, The Adventures of Ozzie and Harriet debuted in 1944.

[FirstAlert(tm) was created by Gayle Essary, founder of Investrend Communications, Inc., parent of Investrend Information. The opinions expressed in FirstAlert(tm) do not necessarily reflect the opinions of Investrend.]

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Free annual reports for companies mentioned in the news are available through the Free Annual Reports Service (http://investrend.ar.wilink.com/?level=279).

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