Investors head into the week with a bit more resolve that U.S. companies are doing a better-than-expected job of managing their way through an economy stifled by 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% of the Standard & Poor's 500 index companies that have reported results have surpassed projections, and 72% 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 were headed for a 10% 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.
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 was 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 Friday to end moderately higher.
The Dow Jones industrial average ended the week down 1.1% and the S&P 500 fell 0.2%. The technology-heavy Nasdaq composite index rose 1.2%, helped by a tech rally Friday.
With many stocks trading at multiyear lows, and the major indexes down nearly 20% 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 whether oil prices will keep falling -- they closed below $124 a barrel Friday. The retreat could give the economy a boost, helping consumers' wallets and corporate profit margins.
