NEW YORK >> As bad as the outlook for the stock market seems, there might be some mild relief for investors in the coming weeks -- provided third-quarter earnings turn out to be even modestly better than expected. All eyes are on earnings
By Hope Yen
Associated PressWall Street's mood is pretty low after earnings warnings from companies ranging from Walgreen to Advanced Micro Devices punished stocks in recent weeks. The three major indexes have had six straight weeks of declines, and the Nasdaq composite index is at a level not seen since September 1996.
But now that the market has factored the warnings into share prices, analysts say there could be some gains if actual earnings aren't as bad as expected. Still, there's a big "if" -- if there are disappointing third-quarter revenue figures, or dim fourth-quarter outlooks, investors are likely to dump stocks again.
"If things don't get any worse, we'll probably get a relief rally along the way," said Ed Peters, chief investment officer at PanAgora Asset Management.
This past week, the Dow Jones industrials registered a sixth consecutive month of losses and gave the blue chips their worst month of September since 1937.
The Dow also registered a record eight straight days of triple-digit moves, five of them downward, as investors alternated between heavy selling and some bargain-hunting. And while the blue chips fell just 38 points Thursday, they were back to a triple-digit drop yesterday.
That could change with the release of earnings reports, which begin this coming week. Companies in the Standard & Poor's 500 are expected to report average profit growth of 5.9 percent above the third quarter of 2001.
Still, analysts believe in the aftermath of several accounting scandals, investors might look beyond the earnings figure and focus more on outlook statements or footnotes for signs of trouble.
"Normally, there's a positive impact to some degree from the earnings reports as opposed to a negative impact from the preannouncements," said Chuck Hill, director of research at Thomson Financial/ First Call.
There are other factors that could affect the market. A fresh batch of economic data are due out in the coming weeks, such as September retail sales, business inventories and leading economic indicators.
Regardless of whether the market sees a lift this month, analysts agree that a sustained rally isn't likely until later in the year once earnings warnings are fully past and companies begin registering longer-term profit growth.
For the week, the Dow lost 173.05, or 2.3 percent, after dropping 188.79 yesterday. The Dow closed the week at 7,528.40.
The Nasdaq composite index had a weekly decline of 59.26, or 4.9 percent. Yesterday, the Nasdaq dropped 25.66 to 1,139.90.
For the week, the Standard & Poor's 500 index fell 26.79, or 3.2 percent. Yesterday, the S&P declined 18.37 to 800.58.
The Russell 2000 index had a weekly loss of 13.80, or 3.8 percent. Yesterday, the Russell fell 8.87 to 347.98.
The Wilshire Associates Equity Index, which represents the combined market value of all New York Stock Exchange, American Stock Exchange and Nasdaq issues, ended the week at $7.599 trillion, down $273.92 billion from the previous week. A year ago, the index was $9.837 trillion.
