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The World Market Slowdown Stalls US Profit Growth

The slump in Europe led awry McDonalds Corp.'s speculations about the US economy returning back to healthier times. The last quarter saw a stalled US economy; and especially so in its profit growth aspect. Taking the data of the S&P 500 Index it would however be seen that there has been a gain by 0.6 percent in the first and second quarter, when the data is compared to that of last year's corresponding time. However, the growth rate for the quarter has been termed as the slowest since 2009, by experts.

It is well known that the companies listed in the S&P 500 index get most of their profits abroad. The European debt and the Chinese slowdown both therefore have their effects on these companies. Back home the S&P 500 index has been buoyed by the gently rising job market and there has been a rise in the construction as well as retailer companies.

One of the marketing strategists at Janney Montgomery Scott LLC commented about the US economy stating that though it was still the most stable one amongst others in the world, yet the pace at which the economy was progressing was quite sub-par to its normal rate. Faster growth, as per him, was the only solution to come out of this tardy present.

The data that has been compiled and analyzed by experts, however, predicts that the US economy would accelerate from its 2011 record of 1.7 percent to 2.2 percent this year. The Federal Reserve Chairman also commented that the economy had yet some way to go for its complete recovery. The period of such a fallen economy has hit the country and the world at large for three and a half years now. The after effects yet resonate is what he opined.

If one looks at the world scenario, one would note a 0.5 percent reduction in growth target as set by China for its own. There is recession in Greece and Spain and therefore the growth rate there too has been limited to only 0.4 percent for 2012. A portfolio manager at Wells Capital Management in Minneapolis mentioned that the slowing down trends all over would surely hurt the people who wish to do business.

There is however some note to cheer about, as the speculators and experts have mentioned that the slump would show a rising trend in the second half of this year. They have speculated the S&P 500 listed companies to have a gain of 6.9 percent this year. The reason would be the rising US economy and other emerging markets that are showing positive signs. The speculation has been further strengthened by experts like Barry Knapp who heads the equity strategy at Barclays Capital also mooting the same idea. He has also drawn attention to the Chinese market which has been weak but is now showing signs of rebounding.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.