Investors head into the week with a bit more resolve that U.S. companies are doing a better-than-expected job managing their way through an economy stifled by unprecedented turmoil in the housing and credit markets.
Wall Street is about midway through second-quarter earnings season, and the overall results haven't been as dreary as some analysts feared. About 61 percent of the Standard & Poor's 500 index companies reporting results so far have surpassed projections, and 72 percent of them were able to top last year's sales figures.
Expectations were low for the quarter and that helped some companies beat forecasts. But if you strip out the market's problem child — the financial sector — S&P said companies are headed for a 10 percent growth rate from last year.
"Regardless of the estimates or hype, a double-digit gain from non-financials is impressive — in any economy," said Howard Silverblatt, S&P's senior index analyst.
The fact that earnings have withstood the second-quarter turmoil might help put a more positive spin on the coming week. Investors are awaiting reports from several members of the Dow Jones industrial average and dozens of S&P 500 companies.
And, there also won't be a shortage of data that might offer some clarity about where the economy is heading. Readings are due on employment, gross domestic product and the manufacturing sector.
As the volatility of recent months has shown, investors are clamoring for more data and earnings to help justify a return to stocks. Last week's seesaw trading pattern indicated more clarity is needed — stocks began the week with a rally on hope about banks, then fell sharply Thursday on fears about banks, and clawed its way back on Friday to end moderately higher.
The Dow Jones industrial average ended the week down 1.09 percent and the S&P 500 fell 0.23 percent. The technology-heavy Nasdaq composite index rose 1.22 percent, helped by a tech rally Friday.
With many stocks trading at multiyear lows, and the major indexes down nearly 20 percent from their October highs, some investors are hoping the market is poised for a rebound.
"Calling the bottom will be easy, six months after the fact," Silverblatt said. "As for now, it is a stock-pickers market for most investors, with short-term speculators playing the sectors."
This week, investors will be watching to see if oil prices will keep falling — they closed below $124 a barrel Friday. The retreat could give the economy a boost, helping everything from consumers' wallets to corporate profit margins.
Dozens of major companies release their quarterly results this week, including Amgen Inc., Verizon Communications Inc., Northrop Grumman Corp., MetLife Inc., United States Steel Corp., Starbucks Corp., Visa Inc., MasterCard Inc., Walt Disney Co., Eastman Kodak Co. and Motorola Inc.
Investors will also be watching closely to see what both Chevron Corp. and ExxonMobil Corp. have to say about the oil markets. Both companies, which are Dow components, are expected to yet again post record profits because of high oil prices.
In economic news, investors on Thursday will get a look at the first report on gross domestic product for the second quarter. Economists polled by Thomson Financial/IFR expect the Commerce Department to report that gross domestic product rose at a 2.4 percent pace thanks in part to the government's tax rebate checks, which appeared to boost the economy sooner than expected. In the first quarter, GDP, the broadest gauge of economic health, rose at a feeble 1 percent pace.
Perhaps the most notable economic reading will be Friday's July employment report. The Labor Department report is expected to show the seventh month of jobs losses and that the unemployment rate ticked higher.
Also Friday, the Institute for Supply Management is expected to release its July index on the manufacturing sector and the Commerce Department is slated to report on construction spending.