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It's a pretty simple story today: Citi [C
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] and Eaton [ETN
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] . Citi, because they spoke about the need to raise reserves for potential losses in the credit area (reviving concerns about a consumer burdened by debt) and Eaton because they lowered Q4 guidance.
Citi's comments lowered financials across the board, hurting not just financials but also credit card companies.
Eaton is important for two reasons: 1) they are one of the first companies to lower Q4 guidance, and 2) they are a classic global, diversified manufacturer.
Eaton owns dozens of businesses in the automotive, aerospace, and industrial business. They own manufacturing facilities all over the world. Not only did the lower earnings, but the talked about a lower outlook for North American automotive, residential construction, and truck markets. Their comments dropped other diversified manufacturers like Parker Hannifin, as well as auto and truck parts companies
In some ways, this is not surprising, because we knew the automotive and housing markets would remain weak into Q4. But this is a warning shot; we have financials increasing reserves for losses, and diversified manufacturers warning housing and trucking/automotive not improving.
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