Money & Business
Profits Picture
Better-than-expected earnings growth has propped up the bull market. In 14 of the past 15 quarters, Wall Street analysts have underestimated corporate profit growth, leading to positive earnings surprises that have driven up stock prices. Yet there are several gauges of profit growth. Measured by year-over-year growth in earnings of companies in the Standard & Poor's 500 index of blue-chip stocks, profits are still strong. But a federal Bureau of Economic Analysis yardstick recently showed a dramatic slowing of corporate earnings growth in the second quarter of 2006. This week, the government unveils its preliminary estimate of third-quarter profits. If it signals another disappointment, investors might worry that a major bull-market linchpin is gone.
Housing's Health
The U.S. economy's health depends heavily on the vitality of the housing market. And that market is ill: Median new-home prices plummeted 16 percent between April and September to $217,100. This week, the Commerce Department will report if new-home prices kept falling in October.
This story appears in the December 4, 2006 print edition of U.S. News & World Report.
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