By Wallace Witkowski, MarketWatch
Another losing quarter predicted, but less low-balling than
usual
Investor attention will swing back to quarterly earnings this
week as another season starts off, heralded by the earnings report
of Alcoa Inc. on Wednesday.
Stocks finished lower on the week
(http://www.marketwatch.com/story/us-stock-futures-steady-ahead-of-june-jobs-report-2015-07-02)
following a soft jobs reports and investor anxiety over Greece. The
Dow Jones Industrial Average and the S&P 500 Index both
declined 1.2%, and the Nasdaq Composite Index fell 1.4% on the
week.
Just like last earnings season, this one is expected to be the
worst showing for the S&P 500 since the third quarter of 2009,
mostly due to declines in the energy sector, according to data from
John Butters, senior earnings analyst at FactSet.
Both second-quarter earnings and revenue are expected to fall
4.5% from the year-ago period. Without energy earnings, the other
nine sectors are expected to see a collective gain of 2.2% for
earnings and 1.7% for revenue, according to Butters. Outside of
energy, the industrials and consumer staples sectors are looking to
be the weakest performers.
Around this time last earnings season
(http://www.marketwatch.com/story/stocks-pressured-ahead-of-earnings-as-job-creation-weakens-2015-04-05),
Wall Street was looking for a 4.6% decline in earnings, but the
first quarter ended up eking out a slight gain over the year-ago
quarter.
Then again, estimates for the first quarter underwent a huge
downward swing of about 9%, whereas estimates for the second
quarter have only declined by about 2.4%, according to Butters.
That relative lack of low-balling over the quarter could allow for
less of a snap back between estimates and actual earnings.
Alcoa(AA) brings investor focus back to corporate profits on
Wednesday as the aluminum producer reports quarterly results. Alcoa
is expected to report
(http://www.marketwatch.com/story/what-to-expect-from-alcoas-earnings-2015-07-02)second-quarter
earnings of 23 cents a share on revenue of $5.81 billion, according
to analysts surveyed by FactSet.
Then, on Thursday, Walgreens Boots Alliance Inc.(WBA) and
PepsiCo Inc.(PEP) report. Walgreens is forecast to report fiscal
third-quarter earnings of 87 cents a share on revenue of $29.67
billion, while Pepsi is expected to post second-quarter earnings of
$1.24 a share on revenue of $15.81 billion.
Of course, the big action doesn't start until next week, when
major banks are scheduled to report.
Also this week, minutes of the June 16-17 Federal Open Market
Committee meeting
(http://blogs.marketwatch.com/capitolreport/2015/06/17/live-blog-and-video-of-fed-decision-and-janet-yellen-press-conference/)
will be released. Most economists expect the Federal Reserve to
start hiking rates in September
(http://www.marketwatch.com/story/fed-still-on-track-for-september-hike-economists-say-2015-07-02),
even though the debt crisis in Greece is still a wild card
(http://www.marketwatch.com/story/greek-debt-crisis-is-wild-card-as-feds-dudley-anticipates-september-hike-2015-06-29)
that could impact plans.
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