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News Summary: Can stocks rise as earnings fall?

Associated Press Published: October 7, 2012

RISING STOCKS, FALLING PROFITS: Stocks are up sharply, despite an expected 1.3 percent fall in third-quarter earnings for companies in the Standard & Poor's 500.

TRIPLE WHAMMY: Corporate earnings are getting hit by slowing economic growth at home and abroad. Also, many companies have cut expenses and squeezed workers as much as possible, so profits margins are dropping, too.

HISTORY LESSONS: Stocks have risen after earnings fell before, but only half the time and occasionally not for very long. The S&P 500 rose 10 percent in the three months following a plunge in profits in the third quarter of 2001. But then stocks dropped in each of the next three quarters.


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