Meanwhile, in corporate earnings land, one group of companies is getting hit hard: Industrials/cyclicals. Think Alcoa (AA), which makes aluminum and engineered components used in commercial aircraft, cars, and construction. Think Fastenal (FAST), which distributes industrial fasteners, tools, paints, and electrical equipment. Think Dover (DOV), which makes a wide variety of products and components used in the oil and gas, refrigeration, auto service, and fluid handling industries. Think PPG Industries (PPG), which makes paints, coatings, glass, and chemicals used in the auto, construction, and aerospace industries. Or think Honeywell (HON), the giant conglomerate that sells into the aerospace, construction, auto, and chemical businesses.
All of them have warned of lackluster demand, and weaker-than-expected sales and earnings growth. Their shares have paid the price. I’m on the record saying we’re in a pre-recessionary environment, and I’ve panned the auto and real estate stocks to no end. Now we have to see just how bad things will get in the weeks and months ahead.
