Equities will rally as companies exceed analysts' prediction in the fourth quarter, according to Uri Landesman, who helps oversee $1 billion as managing general partner of New York-based hedge fund Platinum Partners LLP. If sales growth does decelerate, companies will boost activity in mergers and acquisitions in order to expand, he said.
"Analysts have overreacted," he said in a Nov. 3 phone interview. "Post Thanksgiving, people are going to realize stocks are pretty cheap given the growth that we've seen."
No Recession Signal
Caterpillar Inc., the world's largest construction and mining-equipment maker, posted higher-than-expected third-quarter profit and record sales on Oct. 24. The Peoria, Illinois-based company also said 2012 revenue will gain as the U.S. and global economies improve. While the European debt crisis and the level of U.S. growth are concerns, they don't "signal the onset of recession," Caterpillar said.
Demand for U.S. products is rising outside Europe for industrial companies, said Richard Skaggs, senior equity strategist at Loomis Sayles & Co., which manages about $160 billion. China, the second-largest economy, grew at pace of 9.1 percent during the third quarter, helping fuel Caterpillar's sales from Asia, which increased 55 percent from a year earlier, the biggest jump out of four regions.
"The underlying horsepower of the S&P 500 companies is still strong," Boston-based Skaggs said in a telephone interview on Nov. 3. "We've been fighting the gremlins here over the last few months as the sell-off had the feel of fear of recession. While not dynamic, we don't feel like the economic data is pointing toward recession."