Keep Your Eyes on Corporate Spending Reports

In today's economic environment it is important for individual investors to keep a close eye on key reports. Many of the economic reports are crucial to the stock market's fortunes in both the short and long-term. While I agree that all of the consumer reports are vital, I think that many investors fail to pay enough attention to reports on corporate spending.

The amount that corporations are spending can make or break the economy, as has been shown in some economic recessions that were almost solely "corporate recessions." Corporate spending has a large affect on many things, with the employment market being at the forefront. As corporations become more confident in the economic environment they typically put some cash to work, and it cycles around in the economy to produce some nice results.

How can you find out what the current corporate spending patterns are like? The single best way is to keep a close eye on earnings reports during earnings season. This happens on a quarterly basis, so there are plenty of chances for you to get a peak at the spending levels. A good example of a recent earnings report that clued us in on some encouraging corporate spending patterns was the Intel 2010 Quarter Two Earnings Report. In this report, we saw that corporations are aggressively spending on PC's and servers. In fact, the sheer demand from corporations is what caused Intel to call this last quarter "the best quarter in the history of the company."

The Intel results are highly encouraging to those who are looking for the big corporations to get back into this economy, but one company does not make a trend. Investors need to keep an eye on other technology giants as well as bellwethers in other industries to see what they are saying about business spending.

Corporate balance sheets are largely very healthy at this point, so the cash is there to be put to work. When corporations decide to start putting that cash to work in the economy, it will be a good sign for investors to get more bullish on the economy and the stock market. I encourage all individual investors to watch the earnings reports closely and look for signs of a trend toward higher levels of corporate spending.