updated 6/15/2008 2:56:04 PM ET 2008-06-15T18:56:04

The summer heat has hit Wall Street, and everyone's nervous about investment banks' financial results. Does that sound familiar?

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At this point last year, reports were surfacing about investors bailing out of a Bear Stearns Cos. fund that bet heavily on risky mortgages. A few days later, Bear Stearns committed more than $3 billion worth of loans to keep the fund from sinking — a move that revealed to investors how much spiking mortgage defaults could cost the banks exposed to them.

Wall Street at the time called the ensuing turmoil in the debt markets the "summer credit crunch."

Well, the summer of 2008 is at hand. And the crunch is still here.

Certainly, a lot has happened between then and now. The Federal Reserve has slashed rates and boosted lending, which has helped the debt markets recover a bit. Several banks have kicked CEOs and other high-level executives out of the corner offices. And JPMorgan Chase & Co. bought the toppling Bear Stearns.

But credit remains tight, and investors remain anxious. Lehman Brothers Holdings Inc. is under scrutiny for making missteps similar to those made by Bear Stearns. After revealing a nearly $3 billion loss for the March-to-May period last week and then replacing its chief financial and chief operating officers, Lehman is scheduled to release its official quarterly results Monday.

Goldman Sachs & Co. and Morgan Stanley also report their earnings this week. Analysts predict the two investment banks will post profits for the fiscal second quarter that are much lower than last year's. Even more telling, perhaps, will be the details within the reports. Investors are less concerned with the actual profit decline than they are with how much value the investment banks' assets lost during the quarter.

"Everyone — even those of us who don't really specialize in following them — we're going to be looking for those write-downs. The headline number won't be sufficient," said Kim Caughey, equity research analyst at Fort Pitt Capital Group. "And if they have to do write-downs, the second half of that equation is: Will investors come in to recapitalize them?"

Since last year, financial services companies around the world have written down the value of their various debt-related holdings by more than $240 billion. As a result, many banks — including Citigroup Inc. and Merrill Lynch & Co. — have sold stakes to outside investors to raise extra cash.

The stock market is not as volatile now as it got to be last summer. Instead of plunging, the Dow Jones industrial average has been wavering back and forth, with investors unsure about the direction of the economy.

Last week, the Dow finished up 0.80 percent, but the Standard & Poor's 500 index ended down 0.81 percent and the Nasdaq composite index closed 0.05 percent lower.

One big, complicating factor that was not an issue last year is oil. A year ago, crude oil was at around $68 a barrel; now, it's trading near $135. It's true that oil has been climbing for several years, but this year's jump has been particularly steep and worrisome.

The problem with soaring oil is that it both raises prices and dampens spending — in a sense, it is both inflationary and deflationary. This paradox makes it hard for the Fed to figure out how to adjust interest rates.

So in addition to investment bank earnings this week, investors will be watching oil prices and economic data for direction this week.

The National Association of Home Builders releases its index of June activity; the Labor Department reports on producer prices; the Commerce Department reports on new home construction; the Conference Board reports on May's leading indicators and the Philadelphia Fed releases its regional index of manufacturing activity.

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