4Q 2009 Earnings Race: The New Economy Is Winning

About half of the companies in the S&P 500, and 20 firms out of the 30 Dow Jones Industrials, have reported fourth-quarter 2009 earnings. There are no real standouts, other than a few that were flat on their backs but have managed to get up off the canvas and, of course, those that got a boost from billions of federal financial aid. Even those companies are strong in percentage terms only.

But there is a trend in there, I think: companies in the "new economy," that is, the few large technology companies in the Dow, all had positive results (or are forecast to show positive numbers). For the rest, excluding the financials, the results are so-so.

Once again I call on the insightful Starmine Professional system for an on-the-spot analysis of trends (as well as its accurate predictions) in U.S. corporate earnings. I have categorized the Dow 30 stocks into three groups: "new economy," which is the four tech companies plus Wal-Mart; the financials; and the rest, which are to a great extent old-line industrials or pharmaceuticals.

The five old economy stocks that showed earnings gains did pretty well, ranging from a nine percent jump for J&J to up 34 percent for 3M. But the energy and commodity stocks are doing poorly, as are the equipment companies Caterpillar, GE and Boeing.

But this analysis is a snapshot: it's just one quarter.

More to the point, the market seems mildly disappointed with all the earnings. But hey -- the economy is a disappointment too. Since January 8, when the earnings parade began, the tech-oriented Nasdaq is off 5.6 percent, while the Dow is down about four percent.

I'll be back with a more complete analysis when more reports come in on the S&P 500 stocks.

In the meantime, see the insightful post my colleague Conrad de Anlle has written on the stock rotation in progress.