Aluminum giant Alcoa (AA) beat modest second quarter views late Monday, and said it was optimistic about demand from aerospace and automotive markets.
But that beat wasn't likely to lift dour views for second-quarter corporate earnings, which are being weighed down by Europe's debt woes, slowing growth in China and a sputtering U.S. Chipmaker AMD (AMD) added to the gloom Monday night, warning of weaker Q2 sales, citing China and Europe woes.
S&P 500 earnings should rise 5.7% vs. a year earlier, according to Thomson Reuters data. That would be the weakest since the big declines in Q3 2009, just after the recession ended. And most of Q2 growth will be from Bank of America (BAC) thanks to its easy comparison vs. last year's loss on a mortgage settlement. Without BofA and other banks, a 0.5% S&P 500 profit drop is expected.
Analysts had forecast 9.2% overall growth on April 1. That tamping down of expectations isn't unusual. But with 5% of S&P 500 reports in hand and generally upbeat, Wall Street hasn't nudged Q2 estimates higher.
"It's a little bit different from last quarter and not a great sign," Thomson Reuters corporate earnings research analyst Greg Harrison told IBD.
Expectations were low for Alcoa, too, which kicked off the earnings season Monday. Earnings from continuing operations dived 81% vs. a year earlier to 6 cents per share, but that topped forecasts by a penny. Sales slid 9% to $5.96 billion, ahead of estimates for $5.81 billion. Aluminum prices were down 4% vs. Q1 and 18% vs. a year earlier.
Despite falling prices, "the fundamentals of the aluminum market remain sound," CEO Kleinfeld said in a statement.
Alcoa shares were unchanged late after rising 3 cents to 8.76 in the regular session.
The rest of corporate America seems to be warning of trouble, and blaming crisis-hit Europe. A strengthening dollar — it hit a 2-year high vs. the euro on Friday — also hurts as weaker sales are converted into greenbacks. Europe traditionally accounts for about 15% of S&P 500 revenue.
Last month, United Technologies (UTX) said convulsion in Greece was rippling into Spain, a much larger market for the diversified manufacturer. Consumer products giant Procter & Gamble (PG), cut its profit outlook on Europe, China and the dollar. Ford (NYSE:F) also warned of losses from its European division. Informatica (INFA) dived Friday on European woes, taking down a slew of cloud-computing stocks.
Other signs also hint at trouble. Credit card processors Visa (NYSE:V) and MasterCard (MA) fell Monday on a UBS sell rating on global consumer spending concerns.