Strong Results Expected for Earnings Season

Investors are gearing up for gains in the first full trading week of 2004 as Alcoa Inc. helps kick off what is widely expected to be a strong earnings season.

Adding to the post-holiday glow: The December jobs report, due Friday, is likely to point to steady improvement in the labor market.

“The week ahead is going to be solid,” said Stanley Nabi, managing director at Credit Suisse Asset Management.

The unemployment report for December will grab the lion’s share of attention on Wall Street this week.

The report is expected to show another month of rising payrolls and may help encourage buyers to get a head start on the stock market in 2004.

“If it feels like cash is going to be put to work, it’s going to be ‘catch as catch can’ where people feel that they don’t want to be behind the eight-ball at the beginning of the year,” said John O’Donoghue, managing director of listed trading at Credit Suisse First Boston.

Aluminum heavyweight and Dow component Alcoa will release its quarterly results Thursday.

Analysts expect that S&P; 500 companies will post earnings growth of 22.2% for the fourth quarter of 2002 versus the same period a year earlier, according to Thomson First Call. That would mark the best period of earnings growth since the first quarter of 2000, according to the research firm.

Investors also will be eyeing December same-store sales reports from retailers Thursday for hints on how their quarterly earnings will fare on the heels of the crucial holiday shopping season.

Optimism is growing over this week’s monthly jobs report after Friday’s release suggesting a stunning improvement at factories across the country. A survey by the Institute for Supply Management indicated the biggest upswing in U.S. manufacturing in 20 years. The ISM’s employment index was above 50, signaling the creation of manufacturing jobs, for the second month in a row.

Tuesday ushers in a string of figures, including November factory orders and the ISM’s December reading on service-sector activity.

Weekly unemployment claims, due Thursday, are expected to rise to 350,000 after dropping to 339,000 in the week ended Dec. 27 to the lowest level since January 2001.

From Reuters