Investors Take ‘See No Evil’ Approach to Industrial Earnings
Stable manufacturing results stand in contrast to gloomy data and executives’ words of caution.
Manufacturing earnings aren’t likely to indicate a major dropoff in demand but there are plenty of signs of stress in the industrial economy.
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Actual results from manufacturing companies in the upcoming earnings season are likely to reflect the same surprising stability of the last period — even as the industrial economy continues to show signs of pressure.
Earnings season kicks into high gear next week with Fastenal Co., General Electric Co., Snap-on Inc. and 3M Co. reporting their second-quarter results. The average tariff rates paid in the period — particularly as it relates to China — ended up lower than what was anticipated when companies formulated their profit guidance in the immediate aftermath of Trump’s “Liberation Day” announcement in early April. The worst start to the year for the US dollar since 1973 is also helping offset some of the tariff drag: A weaker domestic currency makes American goods cheaper abroad, boosting their appeal, while also increasing the dollar value of international sales that are repatriated.