( Updated from Jan. 9 with Thomson Reuters' fourth-quarter earnings and revenue projections.) NEW YORK ( TheStreet) -- The market's recent focus has been on jobs and the Fed, but that could change next week as earnings season kicks off with Alcoa's ( AA) report on Monday. The aluminum maker will be the first component of the Dow Jones Industrial Average to report fourth-quarter results in 2010. Tech giant Intel ( INTC) follows later in the week onThursday, while industrial-financial conglomerate General Electric ( GE) and JPMorgan Chase ( JPM) are due on Friday. Expectations are cautiously hopeful, with analysts predicting all four firms remained in the black; Alcoa with 6 cents per share, Intel with 30 cents per share, GE with 26 cents per share, and JPMorgan with 63 cents per share, according to the consensus views of analysts polled by Thomson Reuters. But there have been mixed signs recently of how far along in the economic recovery we have come, and how long it will take for earnings to be driven by top-line growth, rather than cost-cutting measures. > > Bull or Bear? Vote in Our Poll For the entire fourth-quarter earnings season, Thomson Reuters is calling for an estimated growth rate for the S&P 500 of 184%, which is unusually high due to the easy comparison to year-ago earnings. The financials, materials and consumer discretionary sectors are expecting the highest earnings growth rates for the quarter, while the energy and industrials sectors are expecting the lowest. If the final growth rate for the fourth quarter is 184%, it will mark the first time the S&P 500 has recorded year-over-year earnings growth since the second quarter of 2007, and it will mark the end of the streak of consecutive quarters of negative growth rates at nine, according to Thomson Reuters.
On the other hand, the estimated revenue growth rate for the S&P 500 for the fourth quarter is only 7%, although that would mark the first time the S&P 500 has recorded revenue growth since the third quarter of 2008. Retail sales were surprisingly strong during the holidays, leading Macy's ( M), Kohl's ( KSS), Aeropostale ( ARO), TJX ( TJX) and Ross Stores ( ROST) all to lift fourth-quarter profit outlooks this week amid bullish analyst reports. But a jobs report on Friday showing the U.S. economy lost 85,000 jobs in December effectively rained on Wall Street's parade. The Dow added 11 points on Friday, capping a week that started off quite strong, but wavered in later sessions to finish 1.8%, or 190 points ahead. "Everyone is properly focused on the jobless claims -- that's the focus going into the next week," says Tim Speiss, chairman of Personal Wealth Advisors at Eisner LLP. "But you look at the global companies like Intel and Alcoa -- they're doing well in the global economy. It's already rumored that
some will lead with '09 earnings that reflect the biggest gains since 1993." Speiss, who is clearly optimistic on the recovery, notes that, not only were retail sales up 2% to 3%, but that profit margins are reported to have been incredibly strong as well. He says it's an indicator not just of bottom line results, but of consumers' willingness and ability to spend, as well as the profit surge that some companies have set up via hefty cost-cutting measures.
Though those tactics have obviously contributed to the employment meltdown, as demand and production increase, and companies find they've wrung out as much as they can from temp and part-time workers, they will be forced to start hiring again. For instance, Dennis Nason, a former Wells Fargo ( WFC) banker who started an executive recruiting firm, says business has picked up "dramatically" since New Year's day. "Our business is sort of an early indicator, and people have been hiring across the board," he says. While earnings may overshadow economic data, there are some indicators set to come out next week that will provide fodder for those measuring the recovery's steam. The Federal Reserve's beige book, which provides anecdotal evidence of the economic situation in different U.S. regions, will be released on Wednesday. On Thursday, traders will be scoping out initial jobless claims data, which is closer to a real-time employment indicator than the monthly reports. Overall retail sales data will be released on Thursday as well, followed by inflation figures, manufacturing data and consumer sentiment on Friday. Yet Andrew Corn, chief investment officer in charge of equities at Beacon Trust, believes that economic data and even earnings may take a backseat to two other crucial issues: Weather and health care commodities. Exceedingly cold weather is having affects on natural gas inventories, coal usage, transportation and consumer behavior. Rumors that the U.K.'s natural gas inventories were near depletion caused a stir in commodity markets, as demand reached record levels. Some parts of China are facing the coldest winter in half a century, while even sunny Florida faced frigid temperatures, hurting crops as well as orange-juice futures.
On the health-care front, Congress is hammering out details behind closed doors, as the House and Senate work to meld competing bills. However, Corn expects there to be leaks ahead of any formal announcement, which may "drive insurance and pharmaceutical companies one way or the other," he asserts. He also indicates that investors may want to look closely at analyst upgrades and downgrades in the health-care space ahead of a formal congressional announcement. "There's a lot of things going on with the health care bill, and that could really affect the markets next week," says Corn. -- Written by Lauren Tara LaCapra in New York.