How much did the economy slow in the first quarter? A clue could come in the flood of earnings reports ahead.
Noticing "clients' anxiety about equity markets," Thomas Lee of Fundstrat Global Advisors wrote in a note that "Investors worry that the economy is weakening" due to concerns about the strong dollar, the drop in oil prices, and a coming tightening move from the Federal Reserve.
A slew of weak economic reports cannot have helped either. In particular, the March employment report severely disappointed the market, and lead to broader concerns about the pace of economic growth.
Still, the generally bullish Lee thinks investors will soon find renewed confidence.
"An absence of visibility undermines conviction," Lee wrote in his note Friday. And "visibility improves starting with earnings next week."
Predictions for first-quarter earnings have been dire, with analysts expecting S&P 500 earnings to drop nearly 5 percent from previous the year, according to FactSet. And while FactSet earnings analyst John Butters notes that analyst tend to underestimate earnings, he calculates that if the percentage of beats hews close to the average, earnings growth will still come in no higher than negative 1.5 percent.
That would be the first quarterly earnings drop logged by the S&P 500 since the third quarter of 2012.