NEW YORK ( TheStreet) -- The easiest explanation of recent market action boils down to this: There's simply no reason to rally.

Sentiment has gotten so bad that even a better than expected read on weekly initial jobless was talked down by economists and traders alike, rather than lauded as a reason to dive into stocks, which have been deteriorating for nearly a week now. Instead, bonds drew buyers, sending the yield on the 10-year Treasury back below 1.5%.

That QE3 is off the table unless macro conditions get much worse hasn't quite qualified as a tipping point in terms of setting off a major wave of selling but it does seem to have left bulls a bit dumbfounded. After May's ugly swoon, the major U.S. equity averages came back a bit, at least partly on the idea that softening economic data would force the Fed's hand.

Wednesday's release of the minutes of the central bank's latest policy meeting seems to have deflated that notion and with second-quarter earnings season widely believed to be no great shakes, the cupboard is bare when it comes to positive catalysts.

Capital Economics, for one, thinks the selling make sense.

"The weakness in the prices of equities and commodities on Thursday appeared in part to reflect disappointment that the minutes of the June FOMC meeting failed to signal an early launch of QE3 by the US Fed," wrote analyst Julian Jessop. "This interpretation is consistent too with the strength of the dollar both against the euro and gold."

He continued: "As it happens, our view is that the minutes did reveal a growing willingness to consider additional monetary stimulus. But as this support would depend on economic and financial conditions deteriorating further, the markets are surely right not to see this prospect as unambiguously positive."

As for Friday's scheduled news, earnings season is about to get its first whale sighting!

That's right, JPMorgan Chase ( JPM) is finally going to report its second-quarter results, an event that's expected to force CEO Jamie Dimon to get all granular about the whole "London Whale" trading debacle.

The bank's stock, which was above $40 when news broke of the $2 billion-and-counting loss on a credit derivatives hedge, finished Thursday at $34.04, and there's some sentiment out there that full disclosure will be a liberating experience for the shares.

"JPM has promised to reveal the extent and size of the large recent trading losses, and provide an updated timetable for the unwinding of these trades," wrote S&P Capital IQ ahead of the numbers. "We think this will provide closure and stability, and will reduce risk. We also expect the trading loss will be partly offset by other securities gains and mortgage banking revenues in Q2."

The average estimate of analysts polled by Thomson Reuters is for a profit of 72 cents a share from JPMorgan on revenue of $21.9 billion in the June-ended period.

S&P Capital IQ is maintaining its buy rating and $40 price target on the stock, and it's expecting earnings to come in at 77 cents a share, topping the consensus view by a nickel. The firm doesn't believe the bank is quite ready to tip its hat about when it could begin buying back its stock again.

" W e expect JPM to provide no details, until its Board meets, on whether or not it will restart its $15B share repurchase program," the firm said. "Based on our own analysis, we think it is likely that JPM's trading losses will be closed out by mid year, and that a share repurchase program will be restarted later this year. Our '13 EPS estimate of $5.20 assumes a restart of the share repurchase program."

The sell side is still bullish about JPMorgan with 23 of the 33 analysts covering the stock at either strong buy (7) or buy (16) and the median 12-month price target at $46, implying potential upside of 35% from Thursday's close.

The other big name in banking that's set to report is Wells Fargo ( WFC). The average estimate of analysts polled by Thomson Reuters is for earnings of 81 cents a share from San Francisco-based Wells on revenue of $21.4 billion. Wells' shares are up nearly 20% so far in 2012 and the bank has a two-quarter streak of delivering upside surprises on the line.

Friday's economic reports include the producer price index for June at 8:30 a.m. ET and the first University of Michigan consumer sentiment reading for July. The consensus is calling for all-in PPI to decline 0.6% and for the core number, excluding food energy, to rise 0.2%, according to Briefing.com. The U of Michigan survey is seen ticking up to 73.5 from a final reading of 73.2 in June.

And finally, shares of Acme Packet ( APKT), which warned last week, were gaining in late trades on Thursday after the Bedford, Mass.-based data delivery technology company said its board has approved the buyback of up to $200 million worth of its common stock over the next year.

The shares were last quoted at $16.56, up 6%, on volume of more than 105,000, according to Nasdaq.com. Based on Thursday's regular session close at $15.61, the stock is down nearly 50% so far in 2012.

Acme Packet plans to release its second-quarter results on July 26, and the company said on July 6 that it expects to report a non-GAAP profit of 12 to 13 cents a share for the June-ended period on revenue of between $66 million to $68 million.

-- Written by Michael Baron in New York.

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