Investors' Focus Shifts to 3Q Earnings Reports

With earnings reports arriving in earnest this week, investors are likely to get a boost in optimism or an unpleasant surprise.

The stock market's focus this week will be companies' third-quarter earnings announcements and forecasts for the coming quarters. A surprisingly good profit report from aluminum maker Alcoa Inc. last Wednesday helped lift investors' expectations for the results being released this week, including reports from some of the nation's biggest banks.

"Financial institutions are what brought the markets to their knees," said Eric Thorne, senior vice president of Bryn Mawr Trust Wealth Management in Bryn Mawr, Pa., referring to the financial industry crisis that began with the collapse of Lehman Brothers Holdings Inc. a year ago.

"I think it's very important to see how far they've come in the last few months."

JPMorgan Chase & Co. issues its results Wednesday, followed by Goldman Sachs Group Inc., Citigroup Inc. and Bank of America Corp.

In all the corporate reports over the next three weeks, investors will be looking for signs of improvement in the economy. From the banks, investors are hoping to see some sign that consumer loan defaults, including mortgages, are starting to level off. They're also concerned that banks are now having problems with commercial real estate loans as well.

Other companies reporting next week include Google Inc., Southwest Airlines Co. and Dow Jones industrial average components such as computer chip maker Intel Corp., computer maker IBM Corp., industrial and financial conglomerate General Electric Co., and Johnson & Johnson, the world's biggest healthcare company.

If the news this week is good, the Dow may well pass 10,000 for the first time in a year. The Dow closed Friday at 9,864.94, leaving it less than 136 points from returning to five digits.

But even if the week's news isn't up to expectations, many people don't expect the reports to send stocks plunging, said Joe Heider, president of Dawson Wealth Management in Cleveland.