ShutterstockBudget drama threatens to rattle the confidence of investors as the US Congress once again scrambles to get its fiscal house in order.poland email But that's arguably a sideshow to a much bigger problem faced by companies in the US stock market: weak earnings.
"Politics aside, [third quarter] earnings season could prove turbulent given recent macro developments," Goldman Sachs' David Kostin wrote on Friday.
"For a second consecutive quarter, economic turmoil in China alongside mixed US economic activity and a generally strengthening dollar will likely weigh on corporate results."
Earnings are the most important driver of stock prices. Stock prices, for their part, have already experienced heightened volatility lately, with the S&P 500 now down over 8% for the year.
And lately, earnings growth has flattened out and expectations are for growth to actually go negative in coming periods.
In a video released early Tuesday, billionaire investor Carl Icahn observed that corporate earnings were looking fragile, and he questioned whether there would be any buyers as investors look to dump stocks.
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