For some investors, Halloween came early this month. Last Friday, Wall Street darlings Honeywell (HON) and PPG Industries (PPG) both caught investors off-guard by issuing a pair of profit warnings that flew in the face of the recent rotation into more economically sensitive sectors.
Both companies cited specific areas of slowness, but also opined about the sluggish global economy as a broader reason for the lower guidance. Traders were quick to take each stock out to the woodshed, as shares of HON and PPG each declined by 9%.
This kind of nasty reaction is what spooks investors who would normally sleep well at night with Honeywell and PPG Industries, but it goes to show how this market and the economy are very uneven as to which sectors and stocks can be trusted heading into the third-quarter reporting period. We’ve already heard good things in the early earnings releases from the likes of FedEx, Carnival Cruise, Constellation Brands and motor home maker Thor Industries — so there are some preliminary bright spots to point out already. However, the bigger and better story surrounds that of the technology sector and what it promises for third-quarter earnings and year-end performance.
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