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Market Preview: Showing Some Cracks

NEW YORK ( TheStreet) -- The slow meltdown may have finally begun.

Both the S&P 500 and the Dow Jones Industrial Average have fallen in five of the last seven sessions, and it took Federal Reserve Chairman Ben Bernanke keeping the QE3 flame alive to keep the overall losses from stacking up over that stretch.

Now the economic data is showing some cracks after less-than-impressive readings on consumer confidence and durable goods orders the past two days, and a first-quarter earnings season that promises minimal, if any, profit growth is looming as Alcoa (AA) due to kick things off April 10, followed shortly after by the big banks with JPMorgan (JPM) opening its books on April 13.

Ed Yardeni, chief investment strategist at Yardeni Research, took a forward-looking view of the markets on Wednesday, moving up his year-end forecast of 1450-1550 for the S&P 500 to the end of summer. The index closed Wednesday at 1405.54.

"If the economy falls off a fiscal cliff in 2013, so will earnings," he wrote in emailed commentary. "The question is when might the stock market start to discount such a scenario? Investors are likely to do so well ahead of industry analysts, who probably won't lower their earnings estimates until company managements tell them that they are going over a cliff. In my opinion, the fiscal cliff scenario won't be an issue for the market until right after the summer, when investors are likely to focus more of their attention on the political races."

After the summer, Yardeni said: "[A]ll bets are off given the uncertainty about fiscal policy. I have to believe that the lame ducks in Congress will pass temporary measures that postpone the fiscal cliff scenario until the new Congress has a chance to address the mess early in 2013."

As for Thursday's scheduled news, Best Buy (BBY - Get Report) is the big name reporting its quarterly results before the opening bell, and the average estimate of analysts polled by Thomson Reuters is for a profit of $2.16 a share on revenue of $17.2 billion in the February-ended period.

Best Buy shares have bounced more than 15% so far in 2012, but are still off nearly 8% in the past year, pushing the forward price-to-earnings multiple down to 7.2X. The Minneapolis-based consumer electronics retailer reaffirmed its outlook for adjusted earnings of $3.35 to $3.65 a share in fiscal 2012 on Jan. 6 but said revenue of $8.4 billion for December was "slightly lower" than expectations because customer traffic was slow until the last week before Christmas.
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