Earnings season in US seen solid

NEW YORK: US investors are gearing up for gains in the first full trading week of 2004 with Alcoa Inc kicking off what is widely expected to be a strong earnings season. 

Adding to the post-holiday glow, the December 2003 jobs report, due this Friday, is likely to point to steady improvement in the labour market. 

“The week is going to be solid,” said Stanley Nabi, managing director at Credit Suisse Asset Management, which manages about US$312bil. 

Investors are set to return to Wall Street in full force this week after two weeks of holidays and half sessions that thinned out trading volumes. Many will be eager to put their extra cash to work at the start of the new year after 2003 marked an end to a brutal three-year bear market in stocks. 

For 2003, the blue-chip Dow Jones Industrial Average rose 25.3%, ending at 10,453.92. The broad Standard & Poor’s 500 Index advanced 26.4%, closing on Dec 31, 2003, at 1,111.92. And the tech-laced Nasdaq Composite Index climbed 50%, finishing 2003 at 2,003.37. 

The jobs report for December will undoubtedly grab the lion’s share of attention on Wall Street this week. The report is expected to show another month of rising payrolls and may help encourage buyers to get a headstart on the stock market in 2004. 

“If it feels like cash is going to be put to work, it’s going to be ‘catch as catch can’ where people feel that they don’t want to be behind the eight ball at the beginning of the year,” said John O’Donoghue, managing director of listed trading at Credit Suisse First Boston. 

Aluminium heavyweight and Dow component Alcoa will mark the start of the quarterly earnings reporting season when it releases its results on Thursday. 

Analysts expect that S&P 500 companies will post earnings growth of 22.2% for the fourth quarter versus the equivalent year-ago period, according to Thomson First Call. That would mark the best period of earnings growth since the first quarter 2000, says the research firm. 

Roughly 350 S&P 500 companies have offered Wall Street a glimpse of their upcoming fourth-quarter earnings, with about 1.3 negative pre-announcements for every positive pre-announcement. That beats out the average ratio over the past nine years of roughly 2.5 negative pre-announcements for each positive forecast, according to First Call. – Reuters