By Kate Gibson
With Alcoa Inc. spearheading the start of the second-quarter
earnings season, analysts say the lack of revenue growth from the
aluminum giant and the other 29 companies that make up the Dow
Jones Industrial Average is a major factor contributing to Wall
Street's lackluster sentiment.
On Thursday, energy shares led limited gains and health care
shares fronted sector declines as Wall Street registered a mixed
performance. The Dow was off 15.34 points at 8,163.0. The S&P
500 (SPX) rose 1.04 points to 880.6, while the Nasdaq Composite
(RIXF) added 4.14 points to 1,751.3.
The first Dow component to report results for the quarter, Alcoa
(AA) late Wednesday reported a narrower-than-expected loss. .
Since pretty much every company in the country has trimmed costs
during the current recession, positive earnings surprises that stem
from cost-cutting translate into limited upside to stocks, analyst
say.
"As the old saying goes, you can't save your way to prosperity,"
said Nicholas Colas, chief market strategist at BNY ConvergEx
Group.
Judging from individual company weightings that make up the Dow,
nearly 40% of the blue-chip index is unlikely to show positive
revenue comparisons until 2010, at the earliest, said Colas. The
strategist lists IBM (IBM), Chevron (CVX), 3M Co. (MMM) and
Caterpillar Inc. (CAT) as examples.