Why You Shouldn’t Expect Much from Corporate America

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Alcoa, Inc. (NYSE/AA) will be the first Dow stock to report in the third-quarter earnings season, as it kicks off with its results on October 9. The company is one of the world’s top aluminum makers. The stock is also a good indicator for the global economy, as the metal is used in many industrial applications, including aircraft, automobiles, commercial transportation, packaging, building and construction, oil and gas, defense, consumer electronics, and industrial.

In the second-quarter earnings season, Alcoa beat slightly on earnings but revenues are an issue, as will likely be the situation for many U.S. companies. For Alcoa, revenues are estimated to fall 12.7% in the third-quarter earnings season followed by a 5.0% decline in the fourth-quarter earnings season.

Overall revenue growth is estimated to be flat, down from 1.9% growth at the start of the third quarter, according to FactSet. This is not what you would expect if the economy was healthy. And while there is some hope and optimism for the third-quarter earnings season, I expect disappointment across the board.

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