If there are some more Wells Fargos in the mix this week, investors could be very happy.
Last week, Wells Fargo, along with falling oil prices, helped buoy a market that had gotten to incredibly low levels by releasing a better-than-expected earnings report.
Over the five trading sessions, the Dow Jones Industrial Average jumped 4.5% to 11,496.57, the S&P 500 gained 1.7% to 1260.68, and the Nasdaq Composite added 2% to 2282.78.
"We think the bounce can continue," says Ryan Detrick, chief technical strategist at Schaeffer's Investment Research. "This could be the first quarter in four that we beat overall expectations."
Detrick notes out that the 1220 to 1225 range was a double bottom for the S&P 500 in the summer of 2006, and "it sparked a tremendous rally" in the last half of that year, so an echo of that is possible here.
The earnings come fast and furious this week across all major sectors, led by a raft of Dow components. Those include Bank of America and Merck on Monday, Caterpillar and DuPont on Tuesday, AT&T, Boeing, McDonald's and Pfizer on Wednesday and 3M on Thursday.
Investors will be watching to see if the financial sector inspired momentum can continue, but the markets will have to get past earnings releases from a number of companies that have been the subject of concern lately. For example, on Tuesday, reporters Wachovia and Washington Mutual are expected to show some ugliness on their balance sheets.
Other financial companies reporting earnings include UnionBanCal on Monday; KeyCorp, Regions Financial and SunTrust on Tuesday; SLM Corp. Wednesday; MBIA, Genworth Financial and Sovereign Banc on Thursday; and T. Rowe Price on Friday.
"There's been a lot of concern" in the sector, "and some of it's been alleviated by Wells Fargo and JPMorganJPM, and maybe CitigroupC," says Robert Pavlik, chief investment officer at Oaktree Asset Management. "But those are big money-center banks, and you'll have to see how some of the smaller players in that industry are doing."
"I think there will be a differentiation between financial companies that managed their subprime exposure well and those that didn't," adds Scott Wren, senior equity strategist at Wachovia Securities.
The tech sector also has a big week, particularly with some high-profile recent misses (think Google GOOG and Microsoft MSFT). Apple AAPL and Texas Instruments TXN come out on Monday; Broadcom BRCM, STMicroelectronics STM and Yahoo! YHOO report on Tuesday; and Qualcomm QCOM makes its announcement on Wednesday.
"There were high expectations relative to other sectors" for technology, Detrick says. Tech-company earnings "better be impressive" for the stocks do well, he predicts.
Biotech and Big Pharma also make an appearance, as Schering-Plough SGP reports on Monday, and Bristol-Myers BMY, Elan ELN and Eli Lilly LLY come out on Thursday.
The energy and commodities space, one of the brightest areas these days, will see some action. Reports come from Halliburton HAL on Tuesday, ConocoPhillips COP and Freeport-McMoRan FCX on Wednesday, and Newmont Mining NEM Thursday.
"The profits in the energy sector will be good, but I think the market's starting to anticipate that the global economy is going to slow, which could stifle demand," Wren says.
A group that suffers from the high energy prices will clock in as well -- the airlines. US Airways LCC, UAL Corp.UAUA and JetBlue JBLU report on Tuesday, Northwest NWA announces on Wednesday, and Southwest LUV reports on Thursday.
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