The government shutdown and the threat of default seem to have been almost forgotten on the stock market, which had already reached a record high yesterday. This morning S&P500 rose by 0.4%, while the price-weighted Dow Jones Industrial Average is flat as of 10:10 a.m. EDT.
The headline numbers alone General ElectricsThird quarter results don’t look particularly impressive. Revenue and net income fell 1% and 9% respectively compared to the same quarter last year, while earnings per share remained unchanged.
However, the drop in revenue is due to a planned asset reduction at GE Capital and an unfavorable foreign exchange impact of $132 million. None of these factors should worry investors: the first factor is consistent with the company’s long-term goal of shifting profits away from its financing subsidiary; the second factor is outside the company’s control.
In addition, earnings per share of $0.36 beat Wall Street’s expectations by a penny (by the way, these results must have been clearly announced by the company – at Yahoo! Finance, 14 analysts gave estimates in a range of $0.35 to $0.36).
Investors are also focusing on other positive areas, including the conglomerate’s orders in its industrial divisions, which rose a whopping 29 percent to $25.7 billion thanks to global growth. General Electric also said it is on track to meet its goal of increasing its industrial segment’s operating margin to 15.8 percent this year from 15.1 percent in 2012. All in all, these factors (among others) are enough reason for investors to send shares up 1.9 percent this morning.
Yesterday, Dow Component Goldman Sachs reported that net revenues in its fixed income, currencies and commodities division fell an astonishing 44% year-on-year to $1.25 billion, leading to a 20% decline in the bank’s overall revenues. This decline resulted in Goldman Sachs (unusually) coming in last among its peers in bond trading. However, this morning Morgan Stanley The bank reported an exact same percentage decline in revenue from fixed income and commodities sales and trading, confirming that all major banks – and especially pure-play investment banks – suffered from the slowdown in bond market activity.
The article “Headline Numbers Don’t Tell the Whole Story About General Electric’s Quarter” originally appeared on Fool.com.
Fool contributor Alex Dumortier, CFA, does not own any stocks mentioned; you can follow him on Twitter. @longrunreturns. The Motley Fool owns shares of General Electric Company. Try one of our Foolish newsletter services free for 30 days. We Fools may not all agree, but we all believe that considering a broad range of insights makes us better investors. The Motley Fool has a disclosure policy.
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