The New York Stock Exchange enters the peak season for quarterly earnings results next week with traders proceeding with caution after a disappointing initial round of results.
With the week shortened by the Easter holidays, analysts are expecting few participants in the market.
“The market is continuing in its consolidation, digesting late March gains,” Scott Marcouiller of Wells Fargo Advisors said.
With earnings coming into focus, he said, “it feels like the market is looking for something to really latch on to, in terms on earnings momentum, to get it going.”
During the week just ended, the Dow Jones industrial average gave up 0.31 percent, ending the week at 12,341.83.
NASDAQ, dominated by technology stocks, fell 0.57 percent to 2,764.65, and the broader S&P 500 was off 0.64 percent at 1,319.68.
Investors have been chilled by the first quarterly earnings reports that have come out.
“The market is a little bit disappointed with the first numbers,” Marcouiller said. “Expectations are very high. We haven’t got enough reports yet, but it may be a little unrealistic.”
The four big companies reporting so far were greeted with drops in their stock prices — aluminum producer Alcoa, JPMorgan Chase, Bank of America (BofA) and Internet giant Google.
“The expectations are still relatively high for next week and the rest of the earning seasons, so I don’t think the market wants to get too negative before that,” said Marc Pado of Cantor Fitzgerald, noting that the market has resisted disappointments so far.
More generally, the analyst added, “I still think we are developing a very positive outlook for the second half 2011.”
In terms of economic indicators, all the published statistics reinforce the idea that the US Federal Reserve will continue to inject liquidity in the economy, he said.
Even Friday’s inflation figures have not altered that view. Although consumer prices hit 2.7 percent on annualized basis, they remain contained when energy and food prices are taken out of the equation.
The economic agenda will be light next week, with the release of statistics on housing starts and construction permits on Tuesday, followed on Thursday by the release of economic indicators for the Philadelphia region and the composite of US leading economic indicators.
“Earnings are going to be front and center,” Pado said.
Citigroup, Goldman Sachs, Wells Fargo and Morgan Stanley will announce their financial results, as will conglomerates General Electric and United Technologies, pharmaceutical manufacturer Johnson and Johnson, chemicals maker Dupont, Travelers insurance and telephone operators AT&T and Verizon.
In the technology sector, investors will get earnings reports from IBM and Apple, Intel and Yahoo.
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