Brace yourselves. This week, there are no mark-to-market headlines to monitor, no news on the uptick rule, and no Federal Reserve meeting (that'll be a concern going into next weekend, though). However, there are so many earnings reports in the coming week that they overshadow everything else. Robert Pavlik, chief market strategist at Banyan Partners, sums the week up best. "There are a bunch of earnings reports. It really kicks in." Oh yes, it's first-quarter earnings season, and the worst of the storm is about to slam into the market like a nor'easter approaching Cape Cod in November. John Butters, research analyst with Thomson Reuters, said that 140 constituents of the S&P 500 are due to report earnings over the next five sessions.
With so many S&P 500 members set to report next week, only one thing is for sure: The coming week is the one of the busiest this quarter. Butters has some pretty grim statistics for how this quarter is shaping up. In the fourth quarter, 59% of S&P 500 companies beat estimates, 8% matched and a whopping 34% came in below targets. That compares to the long-term average, where 61% meet expectations, 19% match and 21% miss estimates. Although only 10% of the S&P constituents have reported, it looks like a near repeat of the last quarter. So far, 62% of the companies that have reported have beat expectations, 6% have matched and 33% have come in below. But as Butters pointed out, you can't put too much stock in those numbers.
What's scarier are the expectations for this quarter's growth rate. The fourth quarter had a negative growth rate of 67%, the weakest number since Thomson Reuters started tracking the data a decade ago. The blended growth rate for the first quarter, which combines reported results for the 10% of companies with expectations for the other 90%, is negative 37.4%. If there's any solace investors can take in that blended number, it's that it hasn't gone down in the last week thanks to several positive earnings reports out of the financial sector, like JPMorgan Chase ( JPM) and Goldman Sachs ( GS). "That number has actually held up, believe it or not," Butters said. "This is the first week where that growth rate actually hasn't gone down. From the start of the quarter, that growth rate has dropped every week." While financial sector earnings were the focus of last week, plenty of other sectors will be well-represented in the coming week. Sure, Bank of America ( BAC) is set to report Monday, but so are Halliburton ( HAL) and Eli Lilly ( LLY), among others. IBM ( IBM) and Texas Instruments ( TXN) are among the featured reports due following Monday's close. "It's hard to extrapolate the results of the financials to the other blue chip companies that are out there," Pavlik said. "You have earnings across the board. The only thing you can take away from the earnings beats by financials is that maybe the estimates have been taken down low enough to set the bar low enough." Tuesday morning will see results from several key names, including Dow components Caterpillar ( CAT), DuPont ( DD), Coca-Cola ( KO) and Merck ( MRK). Additionally, Bank of New York Mellon ( BK), Coach ( COH), UnitedHealth ( UNH) and New York Times ( NYT) are due to report early Tuesday.
After Tuesday's close, Yahoo! ( YHOO), Advanced Micro Devices ( AMD) and Capital One ( COF), among others, will report quarterly results. Wednesday is another busy day, with Dow components AT&T ( T), Boeing ( BA) and McDonald's ( MCD) set to report early. Wells Fargo ( WFC), Morgan Stanley ( MS), Altria ( MO) and Freeport-McMoRan ( FCX) will also report Wednesday morning. Tech bellwethers Apple ( AAPL), Qualcomm ( QCOM) and eBay ( EBAY), along with Yum! Brands ( YUM) and Sallie Mae ( SLM) will report late in the day. The earnings stream doesn't slow Thursday, as reports from American Express ( AXP), ConocoPhillips ( COP) and UPS ( UPS) will be closely watched in the morning. Amazon.com ( AMZN), Microsoft ( MSFT) and Netflix ( NFLX) will headline the after-hours reports. Friday's earnings wire is considerably lighter, with Ford ( F), 3M ( MMM) and Honeywell ( HON) the key reports to watch.