Earnings poised to steal spotlight on Wall Street

New York: Even as credit market strains show signs of easing, a barrage of earnings will steal the spotlight this week as Wall Street looks for a picture of how profits will fare in the face of a severe economic slowdown.

Stock investors will pay close attention to any guidance that comes out of earning season as they shift their focus from uncertainty about a recession to how long a downturn could last and how big a bite it could take out of the bottom line.

Wall Street also will be watching for whether over-night borrowing costs will continue to ease, signalling that attempts by global authorities to unlock frozen credit markets are taking hold.

"Importantly, there will be statements made by companies about the prospects for business," said Hugh Johnson, chief investment officer of Johnson Illington Advisors, in Albany, New York.

"We know that the third quarter was a disaster and the question is: 'What's happening in the fourth quarter and beyond?'"

Some analysts are anticipating that companies will need to cut their forecasts, highlighting that deteriorating growth could continue longer than had been expected. "The current outlook needs to be adjusted, and it's being adjusted in one direction - and that's down," said Owen Fitzpatrick, head of the US equity group at Deutsche Bank Private Wealth Management, in New York.

Market-watchers got a taste of earnings season last week, with results from bellwethers such as Google, Honeywell and Intel.

Indicators

Tomorrow, September's index of leading US econ-omic indicators will kick off a fairly light week for data. Wednesday's weekly mortgage market index, Thursday's weekly US claims for jobless benefits and Friday's report on September US existing home sales will be scrutinised for signs of further weakness in the housing and job markets.

Analysts said that while corporate results overall haven't been fantastic, they weren't as dire as had been feared. They are expecting to see more of the same next week as earnings season picks up steam.

Among the batch of heavy hitters to release earnings next week are Caterpillar Inc, 3M Co, Boeing Co, and McDonald's Corp - all Dow components. In the tech sector, Apple, Yahoo, Amazon.com and Microsoft are scheduled to report. These are among the most prominent companies listed on the Nasdaq.

"I would say earnings are not going to be great, but they're not going to be as bad as some of the rumours and fears that were going around last week," said Al Kugel, chief investment strategist at Atlantic Trust, in Chicago.