KEY POINTS:
Earnings reports from hundreds of US companies, including some of the biggest, such as Boeing and Procter & Gamble, are likely to drive stock investors' decisions this week, barring any surprises from a mid-week Federal Reserve meeting or Friday's data on January jobs.
Analysts agree there are signs of a slowdown in the robust earnings growth that has helped stocks move higher since 2002.
"I see earnings slowing a little bit," said Michael Alpert, managing director at J & W Seligman in New York. "I think the fourth quarter wasn't bad, but it wasn't a home run."
Alpert, who manages the US$1 billion ($1.4 billion) Seligman Frontier Fund, a mutual fund that invests in small-cap growth stocks, noted that some of his stocks scored large gains in the fourth quarter of last year, anticipating good earnings reports early this year.
In some cases, investors have been inclined to take profits after the earnings met expectations, Alpert noted.
"The growth rate of the economy and earnings is slowing and earnings are, on balance, disappointing," said Hugh Johnson, chief investment officer of Johnson Illington Advisers in Albany, New York.
He noted that fewer companies were beating expectations, compared with recent quarters.
"This has not been as good an earnings season as we're used to, and I think that just makes it very vivid to investors that this could be a tough year, that we're not going to get the kind of earnings that makes for double-digit stockmarket returns this year," Johnson said.
According to Reuters Estimates, fourth-quarter earnings of companies in the Standard & Poor's 500 are expected to rise 8.9 per cent from a year ago. The percentage, which is based on actual numbers from companies that have reported earnings and estimates for the remainder, is down from 9.4 per cent in a previous calculation.
One piece of news that had been expected during the week will not be coming. General Motors said on Friday it would delay its fourth-quarter results and restate past results because of an accounting error.
For the week, stocks fell. The blue-chip Dow Jones industrial average finished the week down 0.6 per cent, while the broad Standard & Poor's 500 index ended down 0.6 per cent. The Nasdaq Composite Index was down 0.7 per cent for the week.
- REUTERS
