Fed Poised to Keep Low Rate: Coming Week

NEW YORK (TheStreet) -- The market heads into the thick of earnings season next week, but investors have already become accustomed to better-than-expected results since half of the Dow components that already reported have beaten estimates. With earnings anxiety largely dissolved, the market can shift its attention to the Federal Reserve's Federal Open Market Committee rate decision on Wednesday and Friday's GDP report for the latest read on the strength of the economic recovery.

"What we've seen so far is a very strong earnings season, but the market isn't really reacting that much, perhaps because people were expecting strong improvement," said Michael Sansoterra, portfolio manager for the RidgeWorth Large Cap Growth Fund.

Next week kicks off with key results from Caterpillar(CAT), Humana (HUM) and Texas Instruments(TXN), which are expected to post per-share profits of 39 cents, $1.14 and 51 cents, respectively. Big energy names like BP(BP), Exxon Mobil(XOM) and Chevron(CVX) are also on tap alongside results from oil service firms like BJ Services(BJS) and Smith International (SII). BP is expected to show a profit of $1.57 a share while Exxon and Chevron are forecast to post earnings of $1.41 a share and $1.93 a share, respectively.

"So far, there have not been many major disappointments," Avalon Partners chief market economist Peter Cardillo said of the current earnings season. "But I think that's already priced into the market, so the real driving force next week will be the economic data."

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The first-quarter GDP report from the Commerce Department will be released on Friday, but Cardillo doesn't foresee any surprises. He anticipates GDP expansion of 3.75%, which is ahead of the 3.5% growth that economists have been projecting.

The most highly-anticipated release, however, will be the Federal Open Market Committee's rate decision announcement at 2:15 p.m. ET on Wednesday, April 28. Although the fed funds rate is expected to remain unchanged, speculation about the statement has been swirling since minutes from the last FOMC meeting showed that the committee has been examining its use of the "extended period" language.

"Obviously, we're not going to see a rate change," Cardillo said. "The statement will be scrutinized, as usual, and I think they'll be more optimistic about the recovery."