A 6.5% rate of GDP growth would usually merit “celebrations in the streets”, says Neil Irwin in The New York Times. Yet America’s second-quarter 6.5% annualised growth disappointed: it was lower than predicted and showed that the recovery is running into “obstacles”.
Shortages of building materials meant that the housing sector “actually contracted” slightly despite huge demand. Getting back to normal is proving a “grind”; consumption of services is still 7.4% below where you would have predicted it to be pre-pandemic, while “spending on durable goods”, which boomed during lockdowns, is 34% higher. Rising cases of the Delta variant in America could also sap the recovery. Investors are recalibrating.
As Nicholas Colas of DataTrek Research tells CNBC, all the “Big Tech companies” have reported unexpectedly good second-quarter earnings. Yet traders reacted by selling off most of them. Investors are worried that its pandemic sales boom will run out of steam. The concern is that we have reached peak earnings growth. “We’ve seen so much demand for tech... over the last year. Can it keep going?”. Corporate margins will be key, says Gina Martin Adams on Bloomberg. “Defined as earnings before interest and taxes divided by sales,” US operating margins are set to rise to a very healthy 16.7% over the next year. Yet spikes in inflation mean some are nervous.
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Analysts have “cut their margin estimates for a quarter of S&P 500 members in the last three months”. Margin trends have historically been a “strong leading indicator of stock-price direction”. For now the margin pressure is concentrated in a few sectors, such as “healthcare, utilities and consumer staples”. If it spreads that could presage a stockmarket rout.
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Why did Labour take over British Steel – was it a good idea?The government has stepped in to take control, not ownership, of British Steel, citing national security and other factors. But does that make sense?
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Should you invest in UK dividend stocks?UK dividends totalled £14 billion in the first quarter, falling 4.6% annually but still beating expectations. Which sectors were the top payers, and will Trump’s tariffs prompt cuts?
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Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocksOpinion Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton
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BP's 'long, painful decline' – and why next year could be even tougherOpinion Long-suffering shareholders in oil giant BP have been pushing for change. It won’t come soon enough, says Matthew Lynn
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Investment trusts tap the profits in exotic and obscure global marketsOpinion Peter Walls, manager of the Unicorn Mastertrust fund, highlights three investment trusts as he shares where he'd put his money
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Klarna postpones US IPO as Trump's tariffs rattle marketsBuy-now-pay-later lender Klarna has postponed its US initial public offering owing to the market turbulence. It is not alone, says Matthew Partridge
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Falling revenues and mounting debt spell trouble for Jumia TechnologiesStruggling African e-commerce platform Jumia Technologies looks headed for the exit, says Dr Matthew Partridge.
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Next reports £1 billion in annual profits for the first time – what's next for the retailer?Clothing retailer Next has become only the fourth member of its sector to surpass £1 billion in annual profits. What does this mean for the company's future?
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Best of British bargains: cash in on undervalued companies in the UK stock marketOpinion Michael Field, Chief Equity Market Strategist, EMEA, Morningstar, selects three attractive UK stocks where he'd put his money
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Building firm Keller presents low debt and ample scope for growthGeotechnical contractor Keller, which supports vital global infrastructure, boasts rising profits and a cheap valuation
