Investors Lose Taste for Large Mutinationals

Investors have grown disenchanted with large-cap U.S. multinationals over the past month, with more bad news still ahead, the Financial Times reported Friday. "Large-cap US multinationals, the darlings of the investment world for most of this year, have been roughed up over the past few weeks. More trouble lies ahead," Bank of America analyst Joseph Quinlan told clients in a note this week. "U.S. corporate earnings, supported earlier by strong global growth and a weak U.S. dollar, succumbed to... deteriorating economic conditions at home." During the first half of 2007 international profits outpaced domestic earnings, and investors turned to multinationals as a hedge against a U.S. slowdown. But over the past month, shares of global firms such as GE (GE -7.5%), UPS (UPS -6.6%), ExxonMobil (XOM -4.3%) and Intel (INTC -7.5%) have suffered significant downturns on the heels of warnings and weak outlooks from companies like Caterpillar (CAT), Cisco (CSCO) and FedEx (FDX). As late as the beginning of October, analysts were expecting 11% Q4 growth from S&P 500 companies; they now forecast growth of just 3.1%.

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