NEW YORK ( TheStreet) -- After last week's dismal economic data, markets are desperately hoping that the upcoming earnings season will have better news for equities. With the market trading at inexpensive valuations, earnings surprises could help trigger a re-rating of stocks. But weak economic data that has sparked fears of a delayed recovery or worse, a second recession, has some sections of the market worried that earnings will continue to disappoint.
Next week, Alcoa ( AA) will unofficially kick off the earnings season with the announcement of its results on July 12. The aluminum major is expected to deliver earnings of 13 cents a share. Intel ( INTC), J.P. Morgan Chase ( JPM) and Google ( GOOG) are some of the other frontline stocks expected to announce results. With little news on the macro front this week, investors are looking for any clue that could point to a superior quarter. On Wednesday, financial stocks surged across-the-board after State Street ( STT) provided a higher-than-expected guidance for its second quarter. The stock gained more than 10%. Meanwhile, analyst estimates already reflect more optimism on corporate performance. Profits of companies in the S&P 500 index are projected to jump 34% in 2010 compared to an earlier forecast of 27% in March 2009, according to estimates compiled by Bloomberg News. The earnings revisions have been prompted by revised forecasts from companies. About 8.6% of the companies that make up the S&P 500 revised their earnings upwards while 3.4% revised it downwards, Bloomberg News reported, citing research from Bespoke Investment. The S&P 500 is now trading at about 12 times its future earnings, which make stocks look attractive from a valuation perspective. Unless analysts are dead wrong.