Chuck Carlson's Latest Market Commentary

While the election results will be on everyone's mind, what will be the biggest factor for stocks going forward isn't who won the election. And it isn't what happens in Iraq or to oil prices.

Simply put, it's all about corporate profits.

Corporate profit growth in the third quarter for the S&P 500 stocks will be about 15% to 17%, not bad, but below the 20% plus growth of the predeeding four quarters. Corporate profit growth is slowing, and that is the main reason for the sluggish market.

Not the election.

Not oil prices.

Not Iraq.

Corporate profits.

I think the fourth quarter will see another deceleration in corporate profit growth, but I think the tide will turn by the second quarter of next year.

Since markets move about six months or so ahead of the profit results, look for a nice rally, perhaps toward the end of the year, and especially in the beginning of 2005.

-Per Chuck Carlson
November 2, 2004

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