Get ready. The earnings floodgates are about to open.

More than a third of

S&P 500

companies are due to report third-quarter profits next week, with heavyweights like

IBM

(IBM) - Get Report

,

Microsoft

(MSFT) - Get Report

and

J.P. Morgan

(JPM) - Get Report

expected to have a big impact on trade.

So far, quarterly earnings are up 12.6% from last year, and companies are beating estimates by 2.3% on average, according to Thomson First Call. While respectable, those numbers aren't as good as analysts had hoped they would be just a few weeks ago. Still, the earnings parade has just begun.

Larry Wachtel, chief market analyst at Prudential Financial, said IBM will set the tone for the market next week. "That's going to be pivotal -- what we're hearing is that it's going to be mediocre at best," he said.

On Monday, Big Blue is expected to earn $1.14 a share on revenue of $23.4 billion. But analysts worry that bookings at the services division could disappoint. Prudential analyst Steve Fortuna said the stock could react unfavorably to the news.

Among other Dow components reporting are

3M

(MMM) - Get Report

on Monday followed by

Altria

(MO) - Get Report

and

McDonald's

(MCD) - Get Report

on Tuesday.

J.P. Morgan,

Honeywell

(HON) - Get Report

and

United Technologies

are expected to chime in on Wednesday while Microsoft,

SBC Communications

(SBC)

,

Caterpillar

(CAT) - Get Report

,

Merck

(MRK) - Get Report

,

American International Group

(AIG) - Get Report

and

Coca-Cola

(KO) - Get Report

are on tap for Thursday.

The news from AIG will no doubt receive extra attention now that New York Attorney General Eliot Spitzer has taken aim at the insurance industry for allegedly fixing prices.

Analysts say results from

eBay

(EBAY) - Get Report

,

Amazon

(AMZN) - Get Report

and

Google

(GOOG) - Get Report

also could influence the market.

John Hughes, market analyst at Shields & Co., said investors are generally prepared for bad news and he doesn't expect companies to be punished for narrowly missing estimates or reducing guidance.

Last week, shares of

Intel

(INTC) - Get Report

rose even though the company's results were lukewarm, he said.

Still, other stocks have come under more serious pressure, with

General Motors

(GM) - Get Report

and

SanDisk

(SNDK)

both falling sharply after reporting disappointing numbers.

Although earnings will take center stage, the price of crude oil is likely to remain a key concern for investors next week. Oil futures rose to a record $55 a barrel on Friday, and while this doesn't seem to be worrying

Federal Reserve

Chairman Alan Greenspan, it is a growing concern for consumers and economists.

The University of Michigan consumer sentiment survey for early October fell to its lowest level since April 2003, largely because of concerns about higher energy prices.

"With crude prices, so far, averaging almost 20%

more this month than in the third quarter, spending is expected to slow in the current quarter," said BMO Nesbitt Burns economist Sherry Cooper.

Greenspan downplayed concerns about oil in a speech Friday, saying the impact on the economy and inflation is "less consequential" than previous price spikes in the 1970s.

Only a handful of economic reports are due out next week, but they could help shed some light on whether growth is about to slow. On Friday, the Conference Board is expected to report that its index of leading economic indicators fell for a fourth straight month. Earlier in the week, housing starts and the consumer price index are due.

Whatever the data show, Prudential's Wachtel said he doubts investors will be taking big positions two weeks before the general election. While Sen. John Kerry has picked up momentum from strong performances in the debates, several polls show him neck-and-neck with President Bush. "It's really a dead heat and is going to go right down to Nov. 2," Wachtel said.