With an onslaught of earnings reports over the next five sessions, headlined by more than a quarter of all S&P 500 companies, the coming week looks to be one of the busiest of this second-quarter reporting season.

While the handful of financial reports in the previous week helped push the S&P 500, Nasdaq and Dow Jones Industrial Average higher, market observers caution that the incoming torrent of releases may not act as a strong enough catalyst for the market to push through overhead resistance.

During the previous week, the major U.S. stock averages jumped roughly 7% each on key earnings reports from several financial companies, including JPMorgan Chase ( JPM) and Citigroup ( C), as well as tech giants Intel ( INTC) and IBM ( IBM).

Through Friday, 55 companies in the S&P 500 Index had reported earnings for the second quarter, with 71% reporting earnings above analyst expectations. Since 1994, 61% of companies beat estimates in a typical quarter, according to John Butters, a research analyst with Thomson Reuters. The outperformance of financial earnings in the last week helped increase the expected growth rate for S&P 500 companies to -35.2% from -35.7%, he said.

Last week was only the tip of the iceberg, as only 39 S&P 500 companies reported. In the coming week, releases from 143 components of the broad-based index will come in fast and furious. Included in that number are twelve components of the Dow Jones Industrial Average, such as AT&T ( T), Microsoft ( MSFT), American Express ( AXP) and Caterpillar ( CAT).

And if that isn't enough for investors clamoring for earnings, Apple ( AAPL), Morgan Stanley ( MS), Wells Fargo ( WFC), eBay ( EBAY) and Ford ( F), among many others, will report quarterly numbers.

Key Corporate Earnings, Week of July 20-24
Company Day of Report EPS Revenue
3M Thursday (early) 94 cents $5.41
Amazon.com Thursday (late) 31 cents $4.68
American Express Thursday (late) 28 cents $6.29
Apple Tuesday (late) $1.16 $8.16
AT&T Thursday (early) 51 cents $30.69
Boeing Wednesday (early) $1.21 $17.15
Caterpillar Tuesday (early) 22 cents $8.86
Coca-Cola Tuesday (early) 89 cents $8.66
Delta Air Lines Wednesday (early) (27 cents) $6.99
DuPont Tuesday (early) 53 cents $7.15
eBay Wednesday (late) 36 cents $1.99
Ford Thursday (early) (56 cents) $24.51
Halliburton Monday (early) 27 cents $3.42
McDonald's Thursday (early) 96 cents $5.72
Merck Tuesday (early) 77 cents $5.84
Microsoft Thursday (late) 36 cents $14.38
Morgan Stanley Wednesday (early) (49 cents) $5.35
Pfizer Wednesday (early) 47 cents $11.27
Qualcomm Wednesday (late) 52 cents $2.72
Starbucks Tuesday (late) 19 cents $2.37
Texas Instruments Monday (late) 18 cents $2.41
United Technologies Tuesday (early) $1.04 $13.91
UPS Thursday (early) 49 cents $11.02
Wells Fargo Wednesday (early) 34 cents $20.49
Yahoo! Tuesday (late) 8 cents $1.14
Blue=Dow component

Paul Nolte, director of investments with Hinsdale Associates, says that although there will be some pickup in earnings, it won't be enough to justify where prices are today. He also notes that the previous week saw big rallies without huge volume to back it up, indicating that there hasn't been a lot of participation.

"The market multiple is still too high given current earnings and expected earnings growth, especially on declining sales," Nolte said.

That may ultimately be the key to the market's reaction to earnings in the coming week. Many companies that have reported already have come up short compared to analysts' revenue expectations. For instance, IBM blew past Wall Street's earnings estimates Thursday, but sales of $23.3 billion fell short of the Thomson Reuters average estimate of $23.5 billion.

"Even with the OK earnings numbers that were out this last week, the top-line sales numbers were terrible across the board," Nolte said. "We're not seeing spending. These companies can cut expenses all they want in order to make earnings, but top-line growth is what we're more interested in, and it still doesn't look great."

Robert Pavlik, chief market strategist with Banyan Partners, takes a more optimistic view. While he acknowledges that the economy has certainly been in a contraction, he argues that conditions have improved and that the trend of earnings beats will continue.

"This is the same conversation we had going into the first-quarter earnings season. Most analysts' estimates are low," Pavlik asserts. "They get their guidance and direction from companies that didn't have a clear picture of what their forecasts would be. As we've seen some improvement in the economy, it's going to be reflected in these companies reporting next week."

Pavlik does admit he's wary because the market has run up to some key resistance levels. The S&P 500, for instance, ended the week at 940.38, not far from the January highs technical market analysts have kept a close eye on.

"We can't get past 950 on the S&P. We keep running into resistance there," he said. "Failure to break through that level on convincing volume could give the market reason to pause. There are really no other catalysts besides earnings."

While the earnings calendar is very busy, the economic docket is bare. Monday will bring the June reading of the Conference's Board leading economic indicators, which economists expect will rise 0.5% after a 1.2% advance in May.

The next economic report won't come until Thursday, when the Labor Department posts weekly initial jobless claims data and the National Association of Realtors releases existing-home sales data for June. Sales are expected to have risen to 4.8 million units last month from 4.77 million in May.

The fourth and final report of the week comes Friday, when the University of Michigan will post the revised July reading of its consumer sentiment index. Economists anticipate no revision to the 64.6 reading initially reported.

Federal Reserve Chairman Ben Bernanke will also be in the spotlight next week as he plans to deliver his monetary policy report to the House Committee on Financial Services on Tuesday and the Senate's Committee on Banking, Housing, and Urban Affairs on Wednesday.

RealMoney Barometer Poll
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