Earnings Grab Spotlight in Coming Week
NEW YORK ( TheStreet) -- A busy earnings calendar is likely to dominate the markets in the coming week, although investors will continue to react to headlines out of Europe and economic data coming out of the U.S. and China amid resurfacing concerns about global growth.
Stocks fell more than 1% on Friday , capping a stretch that saw the major U.S. equity indices suffer their worst week of 2012. Disappointing jobs data and soaring Spanish debt costs were among the factors weighing on sentiment.
The earnings season got off to a seemingly strong start with better-than-expected earnings from Alcoa(AA) , Google(GOOG) , JPMorgan Chase (JPM) and Wells Fargo (WFC) . But aside from Alcoa, the stocks weren't really rewarded, and investors seem to be reserving judgment until they hear from more bellwethers, beginning next week.
Citigroup(C) will set the tone early when it reports before the bell Monday. After underperforming peers in the last quarter and failing to win approval to return capital to shareholders from the Federal Reserve earlier this year, the bank is under heightened investor scrutiny .
JPMorgan and Wells, two of the healthiest banks, have also set a high bar for earnings .
Outside of the financials, investors will also get a smattering of name-brand earnings reports from the tech ( IBM(IBM) and Intel(INTC) ) and consumer sectors ( Coca-Cola(KO) and Johnson & Johnson (JNJ) ).
Consensus expectations heading into the first-quarter earnings season are low, so nominal beats may not be sufficient to get his market excited, according to Burt White, CIO at LPL Financial.
"The whisper number was clearly higher for JPMorgan and Wells Fargo," said White, taking note of the market's lackluster reaction to their strong earnings beats. "The market appreciates that analyst expectations are low and anticipates some surprise. So it can't be just beats, but really solid beats. Are we clearing the hurdle by enough?"
The S&P 500 has climbed nearly 15% over the last six months as investors' concerns about the eurozone debt crisis abated following the European Central Bank's successful long-term refinancing operation. Better economic data in the U.S. and expectations that China's economy is in for a soft landing have also helped markets move higher.
But a lot of those macro factors that have fueled the "risk on" rally have been called into question in recent weeks.
The cost of borrowing in Spain soared this week, sparking concerns that it might be the next country to seek a bailout. China reported much slower-than-expected first-quarter GDP growth of 8.1% compared with expectations as high as 9%. And in the U.S., the pace of job creation slowed visibly in March, and initial jobless claims leapt higher in the past week.