Equity markets finished 2013 with a bang, with the s&p 500 index delivering a return to investors of more than 30%, once dividends are included. And investors' optimism appeared to be borne out by trends in the American economy, the world's largest, as third-quarter growth figures were revised higher on December 20th to show an annualised gain of 4.1%. Even so, there is something slightly odd about this rosy picture. Economic growth is good for the stockmarket because a healthy economy should boost profits. But the data show that profit growth slowed significantly in the third quarter. Total corporate profits in America grew by $39.2 billion over the three months to September, compared with a $66.8 billion rise in the second quarter; domestic profits rose by $12.7 billion, down from $37.8 billion.
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