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Earnings season is beyond the halfway point, and only three companies have boasted of accelerating sales: Google [GOOG
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], Apple [AAPL
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] and Amazon.com [AMZN
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]. What’s everyone else saying?
“Our business is stabilizing, albeit at lower levels.”
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The phrase is so common this quarter that Cramer googled it and found 15 companies that used some variant of it during their conference calls: FedEx [FDX
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], Yahoo! [YHOO
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], Whirlpool, United Technologies, Cooper Industries, Host Hotels, Leggett & Platt, EMC, Thermo Fisher, Marriott, Hubbell, Knight Transportation, Raymond James, Reliance Steel and Landstar.
Here’s Whirlpool’s management: “We continue to see demand levels in the United States stabilizing, albeit at lower levels.”
And United Tech: “Most importantly, order-rate declines for most of our businesses appear to have stabilized, albeit at lower levels.”
How about Marriott: “In the third quarter, we were pleased to see occupancy improve from the second-quarter levels, albeit still down year-over-year.”
While these statements may have been permissible at Dow 8,000, Cramer said, they are not at Dow 10,000. At this level, investors want to hear, “After stabilizing, we are now seeing sales accelerate” to levels at or above those before the downturn. But, again, the only firms saying that are GOOG, AAPL and AMZN. There are a few other tech companies touting stability at pre-downturn figures – Microsoft, Intel, Marvell Tech and SanDisk – but they’re not seeing sales growth beyond that point.
Outside of tech, there isn’t much stabilization at all, certainly not in oil and natural gas, most of the banks and many retailers. And with so few companies at least finding some solid footing, there isn’t enough positive earnings news to push us beyond Dow 10K. Cramer even wondered if we’d seen the highs for the year, unless, of course, some catalyst presents itself to drive stocks higher.
Cramer said he expects mutual funds to take up stocks at the end of the month, but we need to see some earnings power to sustain a legitimate rally – and we don’t have it.
So what happens now?
“I fear the market will soon stabilize, too,” Cramer said, “albeit at lower levels than where we are at this very moment.”
Cramer's charitable trust owns Cooper Industries.
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