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NEW YORK (AFP) - In comparison to record growth of
US company earnings in the fourth quarter of 2003, earnings in the first
quarter can only slacken as America's economic recovery calms down.
"The performance of US groups won't be as upbeat as the last quarter
of 2003," said Joe Cooper, an analyst with Thomson Financial economic
news service.
The slump is basically due to a slight stumble in US economic performance
in general, following 8.2-percent growth in the third quarter of 2003
and 4.1 percent growth in the last quarter.
Similarly, the slight rise of the dollar on currency markets should
offset the advantage it has offered American companies bringing earnings
in from abroad.
However, the image of a US economic slowdown with its accompanying earnings
slump in the first three months of this year, is all relative, Cooper
stressed.
In the last quarter of 2003, US company earnings scored a record 28-percent
growth rate in comparison the first quarter of 2002.
In the first quarter of this year they are expected to rise by 20 percent
against the first quarter of 2003, according to Thomson Financial, a
provider of financial data.
"It would be the third quarter in a row that we would have a 20-percent
plus growth," said Cooper.
Investors are so excited they sent the stock market soaring last week,
leaving weeks of corrections behind them.
Monday's sprint on Wall Street was also due largely to the market anticipating
aluminum giant Alcoa's first-quarter results due out Tuesday, said Peter
Cardillo of the brokerage firm SW Bach.
"The earnings season is kicking off tomorrow with Alcoa,"
he added. It is followed by biotechnology grup Genentech, in full expansion,
on Wednesday, and by General Electric on Thursday.
Alcoa is symbolic of what is expected for this first string of quarterly
results in 2004, driven by the feverish rise of raw materials, especially
crude oil and base metals.
Raw materials companies such as Alcoa or energy giants should post generous
earnings due to higher raw material prices. "Compared to last year,
it's an easy comparison," said Cooper.
Another sector expected to rise with the first quarter tide is technology.
But while the first quarter is expected to do well in figures, it will
fall considerably short in fundamentals since the rise is more due to
consumers' fondness of computers and personal electronic gadgets, and
less to increased investment in companies, according to Thomson Financial's
expert.
"Companies are still trying to soak up extra capacities,"
said Cooper.
The volume of mergers and buyouts and public offerings has favored the
financial sector groups.
Instead, the telecommunictions sector should continue in purgatory,
nearly four years after the technology bubble burst.
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