updated 7/9/2006 5:45:18 PM ET 2006-07-09T21:45:18

The second-quarter earnings season has finally arrived, giving Wall Street something else to think about besides economic reports and interest rates.

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Investors expect yet another round of outstanding profit reports, with Dow Jones industrials Alcoa Inc. and General Electric Co. opening the season this week. Companies in the Standard & Poor’s 500 index have posted 16 consecutive quarters of double-digit earnings growth, a pattern analysts believe is likely to continue.

“One thing we know about this economy is that the corporate sector is in great shape,” said Brian Gendreau, investment strategist for ING Investment Management.

But much of those expectations may have already been priced into the market, analysts say. With little economic data this week to offer guidance on the Federal Reserve’s plan for interest rates, favorable earnings reports will support stocks but may not be enough to push them higher.

“I think the bigger surprise would be results to the downside,” Gendreau said. “Earnings growth has been in the double-digit range for so long now.”

The analyst said the market will likely drift until the Fed issues its next decision on interest rates Aug. 8. However, the combination of declining earnings and any hints that interest rates will keep rising would be “toxic for stocks,” Gendreau warned.

Wall Street finished last week with steep losses Friday as corporate profit warnings stirred fears that the economy may be slowing down too quickly. Near-record oil prices also renewed concerns about a dropoff in consumer spending.

For the week, the Dow lost 0.53 percent, the S&P 500 slid 0.37 percent and the Nasdaq composite index tumbled 1.91 percent.

The University of Michigan on Friday releases the preliminary reading of its July consumer sentiment index, forecast to rise a slight 0.4 point to 85.3. Consumer data will be of particular interest following last week’s round of weak retail sales reports: Analysts have been expecting high energy costs and lending rates to strain spending and slow the economy.

Also Friday, the Labor Department’s report on import and export prices could add to the inflation outlook as Wall Street assesses how much Americans paid for foreign-made goods. In May, prices for imported goods excluding oil grew 0.6 percent; exported items also rose 0.6 percent.

On Wednesday, the department posts the nation’s May trade deficit, forecast to grow to $65 billion from $63.4 billion the month before. The amount of goods moving in and out of the United States will provides clues about global demand.

As usual, investors will look to Thursday’s Labor Department data on weekly unemployment claims for an update on the nation’s job market. First-time applications for jobless benefits slipped by 2,000 to 313,000 last week

Alcoa reports its second-quarter earnings Monday afternoon, and analysts expect the aluminum producer’s profit to grow to 86 cents per share from 46 cents last year. Strength in commodity prices have helped Alcoa bounce back from the recent selloff, gaining 15.9 percent to finish Friday at $33.55.

GE is scheduled to release its results Friday morning. The manufacturing and finance company is seen posting earnings of 47 cents per share, up from 44 cents the year before. GE’s stock has fluctuated in recent months and closed Friday at $33.30, down 5 percent in 2006.

PepsiCo Inc. reports before the opening bell Thursday. The soft drink maker’s stock has rollercoastered this year, rising 6.5 percent from a February low of $56.77 to end Friday at $60.46. Quarterly earnings are forecast to rise to 77 cents per share from 70 cents last year.

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