Wall Street analysts anticipate profits to go down by 20% compared to the previous year.  This is a no-brainer update and shouldn’t be a cause for too much pessimism. It might seem weird but a weaker dollar is really beneficial for some stocks. That’s with emphasis on the word “some”, not “all” stocks. A weak dollar compared to other currencies is a windfall for particular industries. A case in point is the commodities market since virtually 90% of commodities worldwide are traded in dollars. The fragile dollar should actually mitigate the general drop this season. It wouldn’t be unexpected to find out that actual earnings fell by only about 13%.  It’s still not good but a lot better than the 20% decline forecasted by Wall Street.  Whereas a revival is seen to be slow and gradual, the market is a lot more optimistic as it enters the third quarter.

The coast is still not clear, though, for financial stocks so don’t be enticed into investing just by their demonstration of impressive recovery. This can be an illusion created by their being oversold. Following substantial assistance to the financial sector, company insiders began massive discarding of their shares which is certainly not a positive indication, which you can notice with stock charting software. The bottom line for traders is that financial stocks are still unstable. Moreover, there’s escalating job loss which, in turn, causes bigger loan losses. The real estate market is also not showing signs of stabilizing soon in view of surplus inventories and higher interest rates. Let’s keep our fingers crossed and hope for the best.