Corporate Results Drag Market Down, World Financial Crisis Summit May Restore Hope
Wachovia Corporation, which is currently in the process of being bought by Wells Fargo & Co reported a significant third quarter loss, while pharmaceutical company Merck & Co revealed that its quarterly profit fell by 28 percent, and as a result of this they are obliged to cut more than ten percent of their workforce. Yahoo’s 51 percent net income decline will mean a 10 percent cut in the company’s workforce, translating into more than 1,500 job losses. Aircraft manufacturing giant Boeing, noted a 33 percent drop in earnings, citing a prolonged industrial dispute as the main reason for its poor financial performance.
While a jump in the dollar and falling oil prices have also had an affect on Wednesday’s markets, the main focus at present is on poor third quarter corporate results, along with subdued fourth quarter forecasts. It would appear that although the credit freeze is starting to thaw, investors are fearful of the economic slowdown spreading globally and are doubtful that the unprecedented measures being taken by authorities in many countries will be sufficient to turn the situation around.
However, in the prevailing atmosphere of doom and gloom, many stock market investors are still determined to ride out the storm, reasoning that historically bad patches in the market sooner or later give way to a more positive outlook. Boosting hopes for better times ahead was the announcement that President George W. Bush is inviting the leaders of the G20 group of countries to participate in a world financial crisis summit in Washington on 15 November. The G20 group of countries includes Australia, Argentina, Brazil, China, Canada, France, Germany, Indonesia, India, Italy, Japan, Mexico, Russia, South Africa, Saudi Arabia, South Korea, Turkey, the United States, the United Kingdom and the European Union. On the agenda will be a discussion of the global economy, financial markets and a common set of principles to better regulate world markets. Clearly, authorities with the power to affect change are not taking the growing financial crisis lightly.