Wall Street awaits earnings deluge

/ Source: The Associated Press

Wall Street's fixation on economic data turns into a craving for profit news and forecasts this week as a slew of corporate earnings reports arrive.

Investors will receive their first big batch of reports from the final quarter of 2006 and try to determine whether the robust profits that have propelled stocks to new heights will continue.

While market forecasters expect profit growth to slow in 2007 amid what is seen as a decelerating economy, investors are nonetheless anxious to gain a better sense of how companies fared in the fourth quarter. The quarter and overall year saw enormous gains in stock prices, justified in part by double-digit earnings growth.

Gains continued last week, with the Dow Jones industrial average rising 1.27 percent to a record close Friday. The Standard & Poor's 500 index advanced 1.49 percent and the technology-laden Nasdaq composite rose 2.82 percent.

Though earnings season had its unofficial start last week with Alcoa Inc.'s better-than-expected results, the real action begins Tuesday, when the week shortened by the Martin Luther King Jr. holiday starts and investors hear from Intel Corp.

While investors will keep tabs on earnings, economic readings will still hold great sway over the mood on Wall Street. The week brings a slew of data, including figures on inflation and regional manufacturing.

Wall Street has reacted to recent economic reports with a mix of concern, enthusiasm or indifference as it struggled to determine whether the economy is slowing adequately or headed toward recession. It is hoped a gradual slowdown would protect corporate profits and allow the inflation-wary Federal Reserve to lower short-term interest rates.

Investors returning to work Tuesday will be greeted with a snapshot of regional activity from the New York Fed, which is expected to release its Empire State manufacturing survey for January.

Wednesday brings a flurry of data, including the U.S. Fed's beige book, which summarizes regional economic activity across the country. Release of the report precedes the central bank's first meeting of the year at the end of the month.

Also due is the Labor Department's December Producer Price Index, a measure of inflation at the wholesale level. The Fed is also expected to release its report on industrial production and capacity utilization for December.

On Thursday, Fed Chairman Ben Bernanke testifies before the Senate Budget Committee on the long-term fiscal challenges facing the United States.

Thursday is also a big day for economic data, with readings on inflation at the consumer level. The Labor Department's Consumer Price Index as well as the core CPI are due that day. The core figure excludes food and energy costs, whose volatility can distort readings.

The Commerce Department is expected to weigh in with figures on December housing starts and permits. And a report from the Philadelphia Fed on regional manufacturing is also expected Thursday.

Rounding out the week is the University of Michigan's preliminary consumer sentiment reading for January on Friday.

Intel is expected to earn 25 cents per share when it reports fourth-quarter results Tuesday. The chipmaker, which has traded between $16.75 and $26.52 in the past 52 weeks, closed at $22.13 Friday.

On Wednesday, Wall Street expects to hear from American Airlines parent AMR Corp., which is seen as reporting a fourth-quarter loss of 7 cents per share. The stock reached a new 52-week high of $38.10 Friday, topping its earlier high of $38. The stock, which closed Friday at $37.56, traded as low as $18.25 in the last 52 weeks.

Also that day, Apple Inc. is expected to report fiscal first-quarter results. The computer maker last week reached an all-time high after it unveiled plans for a mobile phone. Apple is seen earning 78 cents per share. The stock, which closed Friday at $94.62, traded between $50.16 and $97.80 in the past 52 weeks.

On Thursday, Continental Airlines Inc. reports fourth-quarter results. Wall Street expects the carrier will post a loss of 13 cents per share for the period. The stock hit a 52-week high of $50.26 Friday, topping a previous high of $49.57. The shares have traded as low as $16.77 in the past 52 weeks and closed Friday at $49.66.

Merrill Lynch & Co. is expected to report a fourth-quarter profit of $1.88 per share when it reports Thursday. The investment bank reached a fresh 52-week high of $97.22 Friday, surpassing a previous high of $96.48. The stock, which has traded as low as $64.58 in the past 52 weeks, ended Friday at $97.02.

Friday brings a report from Citigroup Inc. The financial-services company is expected to earn $1.03 for its fourth quarter. The stock has traded from $44.81 to $57 in the past 52 weeks and closed Friday at $54.38.