Corporate Earnings

Stocks opened lower at the start of a week in which investors will learn how U.S. companies fared in the third quarter.  The Dow Jones industrial average was down 46 points, or 0.3%, to 13,564 shortly after the opening bell. The broader Standard & Poor's 500 index was down 7 points, 0.5%, to 1,454. The Nasdaq was down 19 points, or 0.6%, to 3,117. Third-quarter earnings season begins with aluminum giant Alcoa Inc., which announces Tuesday. JPMorgan Chase & Co. is up Friday.

The stock market is within striking distance of multiyear highs thanks to one of its quieter rallies. But as Wall Street returns from summer vacation Tuesday, analysts are less excited than nervous about how stocks will fare in what historically has been the worst month for the market. Though share prices are higher than many experts thought possible a few months ago, bears fret that several obstacles could upset the market. They include uninspiring corporate earnings, uncertainty surrounding the November election and the looming fiscal-cliff showdown in Washington over the expiration of certain tax benefits and the automatic cuts in government spending.

The Dow Jones industrial average closed up for the week but did not make it over the psychologically important 13,000 mark. Stock prices were driven up by optimism about the Greek bailout and the European financial situation. The Dow rose 0.4%, or 46.47 points, on Friday and ended at 12,950.55, the highest level since May 2008. It was in that month that the blue-chip index last crossed 13,000. The Dow gained 1.2% this week. The broader market was mixed, with the Standard & Poor's 500 index up 0.3%, or 3.63 points to 1,361.67.

Stocks have been in a holding pattern ahead of a week that may provide important clues about American corporate earnings and Europe's ability to deal with its debt problems. The Dow Jones industrial average opened almost unchanged after French President Nicholas Sarkozy and German Chancellor Angela Merkel met today in Berlin. During a news conference, the two committed to defending the euro, which has been falling in value in recent weeks as investors worry that the currency will not be able to withstand the continent's economic problems.

The reality of a debt-heavy global economy stuck in low gear hit home in the last three months, driving U.S. stocks to their worst quarterly loss since the 2008 financial crisis. It would be a great quarter to just forget — if it didn't portend worse to come in the final months of the year. That's what investors are left to ponder as they count their losses: Does it make more sense to keep running for safety, as many did last quarter, or take advantage of what may turn out to be bargains in beaten-down stocks worldwide?

The symbol of Wall Street's late-1990s bull market was the giddy dot-com start-up. The housing bull market of the last decade will be remembered for the "no income, no job, no problem" mortgage. Good times! For the current U.S. stock bull market, the defining image may be of a grimacing investor, shoulders shrugged in resignation. Let's face it: If you're on board for this ride you're making money, but it's not really fun and you might rather be earning 6% a year on a bank CD, if only you could.

Not even earnings reports from big names such as Google Inc. and General Electric Co. this week will be able to pull Wall Street's focus away from the possibility of more cheap cash flowing in from the Federal Reserve. Normally when the likes of JPMorgan Chase & Co. or Intel Corp. ? which are also reporting this week ? tell investors how much they earned in the previous quarter, the stock market hangs on every word. But after Friday's surprisingly anemic payrolls report, the increased likelihood the Fed will buy more assets like Treasury bonds to stimulate the economy has investors ignoring the usual benchmarks.

The stock market suffered its biggest setback in three weeks Friday, with the Dow industrials sinking 261 points, as slack consumer confidence and troubling results from bellwether firms revived fears about the economic recovery's stamina. After falling through much of the spring and early summer, stocks rallied this month on the notion that, as they have for the last year, corporate earnings would stay strong in the second quarter despite sluggish U.S. employment. Until the string was broken Thursday, stocks had moved higher for seven straight days.

After the economic and financial disasters brought to us over the last two years by big banks, big auto companies and, lately, Big Oil, it's asking a lot of the general public to root for the success of the Fortune 500 crowd. But for the sake of your 401(k), you'd better hope that corporate America reaped spectacular earnings in the second quarter just ended — and that the companies are willing to predict much more to come. Because in the short run, an upbeat earnings season is pretty much the last hope left for the battered stock market, and maybe also for sustaining faith in the economy's ability to extend its year-old rebound.

The fastest pace of economic growth in six years during the final three months of 2009 fueled a surge in corporate profits that may set the stage for job gains and a broadening of the U.S. recovery. Company earnings increased 8% in the fourth quarter, capping the biggest year-over-year gain in 25 years, figures from the Commerce Department showed Friday. The economy expanded at a 5.6% annual rate. "The fact that you see a sustained recovery in profits over the last four quarters, that's a vote of confidence that the next phase of the recovery could be upon us," said Jonathan Basile, an economist at Credit Suisse in New York.