Barefoot Investor: Worst European Earnings Hitting Industrial Stocks as Stoxx 600 Falls 8.9%

About 53 percent of companies in the Stoxx Europe 600 Index that have reported earnings since July 11 missed analysts’ projections.

The benchmark gauge lost 3.1 percent in the period, the largest decline to start an earnings season since April 2010.

Investors have been relying on manufacturers in Germany and Scandinavia to buoy stocks after Europe’s debt crisis forced Greece to accept a second bailout and cut projections for bank earnings.

Spreading Crisis

The Stoxx 600 fell 8.9 percent from its 2011 high on Feb. 17 through the end of last week as 10-year bond yields climbed as high as 6.29 percent in Italy and Spain on concern the region’s debt crisis is spreading from Greece, Portugal and Ireland. A struggle between U.S. lawmakers to lift the nation’s debt ceiling and avoid a default by the world’s largest economy also contributed to the decline.

The gauge plunged 1.2 percent to 262.02 at the 4:30 p.m. close in London today after a report showed U.S. manufacturing expanded in July at the slowest pace in two years.

A total of 88 companies out of 167 in the Stoxx 600 that reported earnings since July 11 trailed estimates, data compiled by Bloomberg show, while, in the U.S., 78 percent of Standard & Poor’s 500 Index members topped forecasts. Makers of industrial goods accounted for the biggest number of disappointments, with 18 of 33 companies lagging behind projections, the data show. Profits climbed an average of 7.4 percent from a year ago, trailing analyst forecasts by 11 percent.


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