NEW YORK ( TheStreet) -- Those looking to second-quarter reporting season to bring the U.S. equity market back to the highs of the year despite softening economic data and Europe's debt crisis should be careful about getting their hopes up.
Like clockwork, trepidation about earnings season is starting to boil up just ahead of the first rash of reports that matter, i.e. the big banks like JPMorgan Chase (JPM - Get Report) and Wells Fargo (WFC - Get Report), which are both due on Friday.
UBS is predicting the S&P 500 should be able to deliver a "modest" 2% beat overall, a performance that's reflected in its top-down estimate for a profit per share of $25.75 but the firm notes that the consensus view is indicative of "slower growth than we've experienced over the past three years."
Furthering the point, the four trends that UBS highlighted ahead of the quarter aren't exactly comforting."As we look at incoming data, four key trends appear most pronounced: (1) weaker growth and surprises; (2) a less favorable response to announcements by investors and analysts; (3) a negative impact from global exposure; and (4) a more challenging environment for Financials," the firm said, noting that consensus expectations have come down by 3.7% over the past seven weeks The most worrisome of these trends could be the switch seen in global exposure, which has been a plus for many U.S. companies since the financial crisis. Already this quarter, a number of prominent names -- Procter & Gamble (PG), McDonald's (MCD) and Ford (F) among them -- have disclosed weakness in business abroad. "
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