Investor attention will swing back to quarterly earnings this week as another season starts off, heralded by the earnings report of Alcoa Inc. on Wednesday.
Stocks finished lower on the week following a soft jobs reports and investor anxiety over Greece. The Dow Jones Industrial Average DJIA, -0.16% and the S&P 500 Index SPX, -0.03% both declined 1.2%, and the Nasdaq Composite Index COMP, -0.08% fell 1.4% on the week.
Just like last earnings season, this one is expected to be the worst showing for the S&P 500 since the third quarter of 2009, mostly due to declines in the energy sector, according to data from John Butters, senior earnings analyst at FactSet.
Both second-quarter earnings and revenue are expected to fall 4.5% from the year-ago period. Without energy earnings, the other nine sectors are expected to see a collective gain of 2.2% for earnings and 1.7% for revenue, according to Butters. Outside of energy, the industrials and consumer staples sectors are looking to be the weakest performers.
Around this time last earnings season, Wall Street was looking for a 4.6% decline in earnings, but the first quarter ended up eking out a slight gain over the year-ago quarter.
Then again, estimates for the first quarter underwent a huge downward swing of about 9%, whereas estimates for the second quarter have only declined by about 2.4%, according to Butters. That relative lack of low-balling over the quarter could allow for less of a snap back between estimates and actual earnings.
Alcoa AA, +0.27% brings investor focus back to corporate profits on Wednesday as the aluminum producer reports quarterly results. Alcoa is expected to report second-quarter earnings of 23 cents a share on revenue of $5.81 billion, according to analysts surveyed by FactSet.
Then, on Thursday, Walgreens Boots Alliance Inc. WBA, +0.05% and PepsiCo Inc. PEP, +0.15% report. Walgreens is forecast to report fiscal third-quarter earnings of 87 cents a share on revenue of $29.67 billion, while Pepsi is expected to post second-quarter earnings of $1.24 a share on revenue of $15.81 billion.
Of course, the big action doesn’t start until next week, when major banks are scheduled to report.