This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Market Preview: Plenty of Warnings

Updated from 6:04 p.m. ET to include added information about PetSmart being named to join the S&P 500.

NEW YORK ( TheStreet) -- Maybe QE3 is more a market savior than accelerator?

That's the sentiment of David Bianco, chief U.S. equity strategist at Deutsche Bank, who doesn't see any reason to boost his S&P 500 target for 2012 in the wake of the Federal Reserve's pledge of maximum accommodation until the economic recovery solidifies and shows signs of real traction.

"Recent economic reports suggest that the Fed's latest stimulus efforts were ahead of the curve," he said in commentary on Monday. "Unfortunately, 1H12 US GDP growth disappointed and US exports and manufacturing sharply decelerated through 3Q12. We welcome the Fed's actions given these disappointments and we are encouraged to see monetary policy ahead of the curve, but we would have preferred to see US and global growth improve. Thus, we do not see QE3 as a positive to our 1475 year-end S&P 500 target, but rather an offset to the negative developments in US exports, US investment spending and global manufacturing activity."

Bianco isn't expecting third-quarter earnings season to be a boon to market sentiment either. According to data from Thomson Reuters, analysts are currently anticipating a 2.1% year-over-year decline in earnings from the components of the S&P 500, a performance that would provide scant reason to put money into equities at this stage of the game.

"3Q reporting is likely to exacerbate investor anxiety about growth and elections," Bianco said. "Energy and Materials will bear the brunt of the y/y decline in 3Q EPS, but subpar growth is expected at all sectors. Five sectors expected to post y/y EPS declines and more than 5% growth at the rest. Weak 3Q EPS may not shock investors, but fewer companies beating and more missing estimates will exacerbate pre-election investor anxiety. 5 of the 20 Aug. qtr-end companies to report missed."

Tobias Levkovich, chief U.S. equity strategist at Citigroup, was also putting a spotlight on third-quarter results, which will start dribbling in later this month with Alcoa (AA) kicking things off for the Dow on Oct. 9.

"With more than 120 S&P 500 companies having pre-announced thus far, the trend is quite adverse, with a negative-to-positive ratio of 4.3, the highest level since 1Q09's 4.7 and 4Q08's 4.0. Moreover, this compares to more favorable ratios of 2.6 in 3Q11 and 3.3 in 2Q12," he said.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
PETM $82.98 0.04%
ACOR $34.20 0.00%
AAPL $123.25 0.00%
BTH $7.60 0.00%
CAB $56.78 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs