The Dow and Earnings Season


This week essentially marks the end of earnings season for blue-chip companies on the Dow Jones Industrial Average (INDEX: ^DJI) , as the past two weeks have seen the lion's share of Dow companies reporting. Since Alcoa (NYS: AA) kicked things off two-and-a-half weeks ago, the blue-chip index is down more than 460 points, or 3.6%. Below are two of the biggest trends in this regard.

1. Mixed results
As I noted earlier today, according to data compiled by Bloomberg, 71% of S&P 500 (INDEX: ^GSPC) companies have beaten consensus estimates on the bottom line, while only 41% have done so with respect to revenue projections. This was the case with DuPont (NYS: DD) , Boeing (NYS: BA) , Merck (NYS: MRK) , and Caterpillar (NYS: CAT) , among others.

The disparity is a function of two trends. First, companies are aggressively cutting costs. Earlier this year, for example, the consumer products giant Procter & Gamble (NYS: PG) announced a $10 billion restructuring plan aimed at improving productivity. And second, demand is deteriorating, particularly within the technology sector. Intel (NAS: INTC) noted this last month when it downgraded its forward guidance, saying that its customers are decreasing their inventories at a time when they typically build them.

2. Downbeat forward estimates
The second big trend concerns decreased forward guidance. Such was the case with Intel, DuPont, Caterpillar, and General Electric (NYS: GE) , among others. Comments by Caterpillar's chief executive officer were fairly typical of the bunch, expressing that "economic conditions are weaker than we had previously expected."

One of the few outliers in this regard was Boeing, which reported earnings yesterday and broke the mold by raising its estimates going forward. According to its CEO: "Underpinned by our solid performance to date and positive outlook, we are raising our year-end guidance for revenue, earnings and operating cash flow. We remain well positioned for long-term growth with a clear focus on quality, productivity and disciplined program execution."

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John Maxfield has no positions in the stocks mentioned above. The Motley Fool owns shares of General Electric Company and Intel. Motley Fool newsletter services recommend Intel and The Procter & Gamble Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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