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Market Preview: A Double Recovery?

Updated from 6:04 p.m. ET to add information on after-hours trading.

NEW YORK ( TheStreet) -- The rally in the first few days of the new year proved too tempting to resist.

After months of outflows, mutual funds actually saw investors put money into equity funds last week. According to the Investment Company Institute, long-term mutual funds investing in stocks took in $1.43 billion in the week ended Jan. 11. Funds investing in U.S. stocks got $753 million, while international equity funds swelled by $681 million.

To put that in perspective, equity funds experienced outflows of $25.07 billion in the previous four weeks, and have been running negative overall since May.

ICI, which bases its numbers on data collected covering more than 95 percent of industry assets, said bond and hybrid funds (investing in both bonds and stocks) were still more popular, amassing inflows of $7.89 billion and $1.95 billion respectively, but it's still a sign that at least some investors are starting to back up the general bullish sentiment out there with their money.

Tomorrow is the first big earnings Thursday of the season with big names galore on the docket. It's very early, of course, but the fourth quarter is undeniably off to slow start, which is all the more concerning given the bar was set pretty low in the first place after 20% of the S&P 500 issued negative pre-announcements.

Through Tuesday, with 7% of the S&P 500 having reported, the blended (estimated and reported) earnings growth rate for the quarter sat at 5.5%, down from 7.9% on Jan. 3 and 15% on Oct. 3, according to Thomson Reuters data. Only 49% of the reporting companies have beaten expectations vs. a historical average of 70% in a typical quarter.

Again, it's very early but those numbers have to have bulls at least a little nervous. Stocks continued to chug higher on Wednesday though with the S&P 500 finishing above 1300 for the first time since mid-summer and the financials still surging, so investors haven't been all that bothered so far.

As for Thursday, Bank of America (BAC - Get Report), the last of the big money-center banks to open its books, is the headliner tomorrow morning. The shares have started 2012 with a gain of 17%, but that's probably done little to mitigate the anger of long-term holders who have seen the stock decline more than 50% in the past year.
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