NEW YORK ( TheStreet) -- Investors anticipate another strong U.S. corporate earnings season, but any positive results will once again have to battle entrenched fears related to the European debt crisis.

In the first week of 2012 trading, stocks closed mixed most days as investors tried to cling to New Year's optimism in the face of expanding European fears. In the first three days of trading, stocks were only able to rebound after the close of European markets allowed investors to focus on positive U.S. jobs data.

Friday's drop in the U.S. unemployment rate to its lowest level in almost three years wasn't enough to break Europe's hold on sentiment.

Despite the unofficial start of corporate earnings season Monday afternoon, uncertainties in Europe will continue to hold their grip. Spain and Italy -- the two eurozone economies seen most at risk of joining Greece, Ireland and Portugal in the debt crisis -- will test investor sentiment next week as they issue bonds at auction. Spain hopes to issue three- and five-year bonds on Thursday, while Italy will follow on Friday with an auction of bonds and floating-rate notes.

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In the U.S., the market will kick off the week on Monday with a report on consumer credit for the month of November. The Federal Reserve is expected to report that U.S. consumer credit increased by 7%, according to a survey by Thomson Reuters. The measure of debt rose for a second straight month in October, adding 3.7%.

After the close of trading on Monday, Alcoa ( AA) will unofficially kick off fourth-quarter corporate earnings season. Analysts expect the largest aluminum producer in the U.S. to report earnings of 1 cent a share, according to a survey by Thomson Reuters, representing a 95% drop from 2010's fourth-quarter earnings of 21 cents a share.

Tuesday will bring the Commerce Department's report on wholesale trade inventories for November. Wholesale inventories are expected to rise 0.5% while wholesale sales are expected to gain 0.8%, according to forecasts from Thomson Reuters. Wholesale stockpiles grew 1.6% in October as companies anticipated rising consumer demand. Sales at the wholesale level increased 0.9% in the month.

The early hours of trading on Wednesday will likely be dictated by headlines out of Europe as Italian Premier Mario Monti and German Chancellor Angela Merkel meet in Berlin in an effort to calm the region's debt crisis.


Wednesday afternoon, investors will keep an eye out for the Federal Reserve's Beige Book. Formally called the Summary of Commentary on Current Economic Conditions by Federal Reserve District, the Beige Book is published eight times a year, usually two weeks before the Federal Open Market Committee meeting, to summarize anecdotal information from businessmen, economists and market experts on the strength of the economy.

Thursday morning will bring the Labor Department's weekly read on initial jobless claims for the week ended Jan 7. Economists expect initial claims to rise to 375,000, after falling 15,000 to 372,000 the prior week.

Retail sales will also spark interest Thursday morning as the Commerce Department announces data for December, the biggest holiday spending month. Economists expect sales to have risen a meager 0.2% last month after gaining the same amount in November.

"Even a fairly modest 0.3% month-over-month rise in retail sales values in December would probably be enough to secure a 2.5% annualized gain in real consumption in the fourth quarter as a whole. That would be a healthy improvement from the third quarter's 1.7%," Paul Ashworth and Paul Dales of Capital Economics wrote. "With income growth still very weak, however, there is a danger that in due course real consumption growth will slow."

Although Italy auctions its bonds on the last day of trading next week, the Bureau of Labor Statistics will report how U.S. import and export prices moved during December. Economists expect little change in the month, seeing export prices rising 0.1% and import prices falling 0.1% for the month. A drop in import prices would reverse the previous month's 0.7% gain, while a slight rise in export prices would continue November's trend.

Later in the morning the University of Michigan will reveal how the new year affected consumer sentiment. A preliminary estimate of consumer confidence in January is expected to reveal that sentiment improved 1.1 points to an index reading of 71, according to a survey by Thomson Reuters.

"While there is little evidence that the temporary extension to the payroll tax cut will provide a boost to sentiment, the overall economic recovery is gathering steam," Ashworth and Dales wrote. "Moreover, just like December, seasonal factors tend to add an extra two points in January. We expect the University of Michigan index to rise from 69.9 to an eight-month high of 74. That said, in a truly healthy economic environment, this measure of confidence would be at 85 or above."

Key companies scheduled to report earnings this week following Alcoa include Synnex ( SNX) and WD-40 ( WDFC) on Tuesday. Chevron ( CVX) is expected to report fourth-quarter earnings of $3.29 a share on Wednesday, while homebuilder Lennar ( LEN) is expected to see earnings of 49 cents a share, according to Thomson Reuters.

JPMorgan Chase ( JPM) will round off the week on Friday. The bank, which topped Bank of America ( BAC) to become the largest U.S. lender by assets in the third quarter, is expected to report earnings of 93 cents a share. That would mark a 17% decline from the same quarter a year earlier.

-- Written by Kaitlyn Kiernan in New York.

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