RPT-Wall St. Week Ahead: Earnings key test as recession looms
April 6th, 2008 | by admin |(Repeating item that initially moved on Friday)
By Jennifer Coogan
NEW YORK, April 6 (Reuters) - As the earnings reportingseason for the first quarter kicks off this week, stockinvestors will be keenly assessing to what extent the slowingeconomy is taking a toll on Corporate America
First-quarter U.S. earnings estimates have fallen sharplysince the period began as expectations for a recession havegrown. Standard & Poor’s 500 companies are now expected to showan 8.1 percent decline in earnings, down from analysts’projections at the beginning of the quarter for a 4.7 percentgain in earnings, according to Reuters Estimates.
In the most recent signal of economic weakness, a reportreleased on Friday showed an unexpectedly large drop in jobs inMarch, marking the third straight month of contraction in thelabor market.
“Even though the employment report was lousy, investors’minds were already wrapped in the fact that we’re in the earlystages of recession,” said Fred Dickson, market strategist anddirector of retail research at D.A. Davidson & Co. in LakeOswego, Oregon. “The attention’s turning towards earnings andeveryone will be holding their breath because it’s one moredark cloud for investors to deal with.”
Aluminum producer Alcoa Inc (AA.N: Quote, Profile, Research), the first Dow componentto report for the quarter, will release results after theclosing bell on Monday. Conglomerate General Electric Co(GE.N: Quote, Profile, Research), another Dow component and a bellwether for the economy,caps off the week, delivering its earnings on Friday.
Despite the drop in jobs on Friday and Federal ReserveChairman Ben Bernanke conceding for the first time on Wednesdaythat the economy could slip into recession, the market stillmanaged to end the week on a high note.
The S&P 500 .SPX gained 4.2 percent, the Dow .DJI added3.2 percent and the Nasdaq .IXIC jumped 4.9 percent, itsbiggest weekly advance since August 2006. The bulk of the gainscame on Tuesday, when Lehman Brothers (LEH.N: Quote, Profile, Research) put liquidityconcerns to rest after it easily raised $4 billion in freshfunding.
