Corporate Earnings Help Stock Market Rally

Even though earnings aren’t great, they are still beating forecasts. And in the investing world, that’s all that matters — well, during earnings season at least. With corporate earnings showing signs that things aren’t as bad as they have been , the bulls are celebrating. Corporations like Ford and many of the banks have been reporting earnings that are better than expected. Some companies have even been reporting profits. This has many investors excited about the prospects for the future. As a result, investor sentiment is causing a stock market rally .

Layoffs and the bottom line

One of the reasons that companies have been reporting better than expected earnings is to do with layoffs. This is one of the cost-cutting measures used by companies to help boost the bottom line. However, the fact that layoffs are a very real issue has not really served to give investors on Wall Street pause. This is unfortunate, because layoffs could return to bite companies in the future. The unemployment rate should be considered a vital economic indicator.

With people out of work, they are less likely to spend money. Consumer spending is important to many companies. If no one can buy their products, it is difficult to see profits continue to rise. The right balance will need to be found by companies to see that they don’t get too exuberant about the bottom line, effectively pricing everyone out of products and services.

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