The time has come for the speculation to end and the facts to begin.
Yes, it's here again --
being corporate earnings season, the quarterly event when public companies flood the market with details on their sales, profits and forecasts and when investors parse the numbers to try to figure out who's got it working and who's falling apart.
The very unofficial start will come Tuesday when
posts its results.
The aluminum concern won't be alone, as the schedule also features video-game maker
, biotech giant
and Blackberry seller
Research in Motion
While the sample is on the small side and the intensity of reports will build as April progresses, next week might provide some interesting insight as to how the quarter could shape up, because it does touch on a variety of industries.
The stakes will certainly be high following the most recent fourth quarter, even if expectations aren't. According to Standard & Poor's, the
operating earnings in the last quarter of 2006 increased 8.9% from the same period the prior year.
Not bad, but it did represent the first time the S&P failed to show double-digit profit growth since the first quarter of 2002 -- that was 18 quarters ago.
"The decline had been expected in the second quarter, but consumer spending, energy profits and a strong economy kept it going," said Howard Silverblatt, senior index analyst at Standard & Poor's, in a statement. "The fourth quarter, however, reflected the impact of a slower economy, difficulties in the automotive and home building market, and strong holiday price competition in the electronic retail group."
Paul Mendelsohn, chief investment strategist with Windham Financial, says the general belief is that earnings won't be particularly robust and that, as a result, many companies could surprise on the upside.
"My sense is that earnings are going to still be stronger as the economy has been running at a healthy pace," he says. "These numbers will be important as it'll give us an idea of how we started the year off. People don't want to be too short here in case we come in stronger than expected."
Art Hogan, chief market analyst with Jefferies, agrees in a sense, saying that the bar is so low that many companies might be able to easily hit or exceed targets. However, he isn't convinced that that would lead to a rally.
"The reactions might be muted to stronger results because we don't know whether we can make bold predictions and raise expectations for the year," he says. "The commentary and the conference calls will be as important as they've ever been. It might be hard to get this market excited."
Meanwhile, Robert Pavlik, chief investment officer with Oaktree Asset Management, cautions investors that many companies still have the ability to give cautionary guidance.
"It may turn into a disappointing quarter," he says. "People are bracing themselves more for a negative quarter. The stock market holding up as well as it has is a surprise."
Also on deck are drugstore operator
and home-goods purveyors
Bed Bath & Beyond
Earnings aside, there will also be plenty of new developments on the economic front, including the minutes from the last meeting of the
policymaking arm, the Federal Open Market Committee, on Wednesday.
The gist of what happened at the gathering is already known: The Fed left rates unchanged for the sixth-straight time and offered commentary that had a little something for both the hawks and the doves.
Even so, the market has a tendency to place tremendous weight on every single word the central bankers utter or write, meaning wild action could be in store following the release of the minutes.
One factor that will, with any luck, mitigate Fed-related gyrations is the fact that Chairman Ben Bernanke has already spoken publicly in Washington about the economy since the FOMC last got together, says Mendelsohn.
"When you have congressional testimony between the statement and minutes, the market won't get the same volatility off of the release of the minutes," he says. "The chairman has already explained what will likely be in the minutes. Bernanke has made it very clear that the risks are still to the inflation side."
Additionally, the calendar includes import and export prices, trade balance data, the producer price index and the University of Michigan's preliminary report on consumer sentiment in April.
The latter part of the week will feature monthly chain-store sales from
and other retailers.
The stock market got the second quarter started on the upside last week, rising all four sessions. The
Dow Jones Industrial Average
advanced 1.7%, the S&P 500 was up 1.6%, and the
The question is whether it can continue, and the answer, at least for the near term, is on tap.