Stock market bulls look to earnings for salvation

Traders work on the floor of the New York Stock Exchange, Oct. 10, 2014.
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Traders work on the floor of the New York Stock Exchange, Oct. 10, 2014.

Stock market bulls are banking on a shift in focus next week to earnings, from the global economy, with major U.S. banks and technology companies among the corporations slated to report third-quarter results.

"Next week, in my opinion, we really do switch to all about earnings," said JJ Kinahan, chief strategist at TD Ameritrade.

"Typically when we transition into the heart of the earnings season, U.S. markets tend to shift from the macro focus where we are concerned about the European slowdown, Ebola, ISIS, Russia-Ukraine to company earnings, and we'll have plenty of that over the next two weeks," said Art Hogan, chief market strategist at Wunderlich Securities.

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The earnings season gets going in earnest on Tuesday with JPMorgan and Wells Fargo, which should help set the tone for the rest of the season in part because "those banks have so many other businesses, like housing and small-business loans," Kinahan said.

"And then we'll get eBay and Google, so a little bit of the tech watch," Kinahan added.

"We all know the Fed is going away, and Germany is resetting our thought processes on international economies. JPMorgan and Wells Fargo will take some of that pressure off and focus on things more immediate," Kinahan said.

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"When you're in a 'sky is falling' mindset, you only pay attention to the bad news," said Hogan, noting that Wall Street overlooked another run of upbeat U.S. economic reports to fixate on downbeat economic reports from Germany.

Kinahan agreed, noting results Wednesday from Costco Wholesale were overlooked, with the discount retailer also striking "a nice tone going forward."

Putting it in perspective, after a week that "everyone thinks is so bad, we're only a little over 4 percent from the all-time highs set last month," said Kinahan of the S&P 500, speaking before Friday's close, which had the index, along with the Nasdaq Composite, posting their worst weekly losses since May 2012.


Earnings: Citigroup, Johnson & Johnson, JPMorgan Chase, Wells Fargo


Earnings: Bank of America, American Express, eBay, Netflix

8:30 a.m.: Retail sales for September

8:30 a.m.: Producer price index for September

8:30 a.m.: Empire State Index for October

10 a.m.: Business inventories for August

2 p.m.: Federal Reserve's Beige Book


Earnings: Goldman Sachs Group, Google

8:30 a.m.: Weekly jobless claims for week ending Oct. 11

9:15 a.m.: Industrial production for September

10 a.m.: Home Builders Index for October

10 a.m.: Philly Fed


Earnings: General Electric, Morgan Stanley

8:30 a.m.: Housing starts for September

9:55 a.m.: Consumer sentiment for October