Wall Street Braces for Earnings Outlooks

Wall Street will take its cue from a mountain of economic data and corporate earnings forecasts this week, and analysts expect some choppy trade but no major movement.

The Street is bracing for a new “confessional season,” the ritual airing of quarterly corporate earnings outlooks that has evolved from tete-a-tete briefings for analysts into a full-fledged public unburdening.

Among companies handing in their scorecards, publishing software maker Adobe Systems Inc. issues second quarter results and ketchup maker H.J. Heinz Co. issues fiscal fourth-quarter earnings, both on Thursday.

But so-called corporate pre-announcements, which begin flowing at a heavier pace, also will take center stage.

Negative pre-announcements for the current quarter are projected to surpass the 1,000 mark, overtaking the record 935 warnings issued in the first quarter, according to Joseph Kalinowski, equities strategist with market tracker Thomson Financial.

So far, 695 pre-announcements have been issued in the current quarter, of which 449 are negative, up sharply from the 68 corporate warnings in 134 pre-announcements at the same point last year.

Although in terms of sheer numbers this looks gloomy, there is a silver lining. The number of positive announcements is on the rise, Kalinowski said, and added that more warnings are now coming from small to mid-size companies than top-tier corporations, which topped the laggards’ list in the first quarter. This could mean that the overall effect of bad news on the market could be less severe this time around.