Analysts expect a 21 percent drop in Apple earnings when it reports after the closing bell. Apple is expected to report earnings of $7.32 per share for its third fiscal quarter, on revenues of $35.02 billion, flat with the same quarter last year.
"The heat is on Apple for sure, but then where are expectations for a stock that's gone from $700, down to $375 and back to $400 and change. You've got to expect at some point in time, it's pretty much priced in," said Art Hogan of Lazard Capital Markets. "It's not an earnings story. It's more about the road map."
Analysts are hoping to hear Apple talk about future plans, like a possible iWatch and other product updates. They also expect to see the impact of customers gravitating toward some of Apple's lower priced products like the smaller, cheaper iPad.
If its earnings come in as expected, Apple will have reported its third straight quarterly decline in profits and its largest drop since 2004. Birinyi Associates notes that since 2004, traders have reacted positively to Apple's earnings reports 67 percent of the time. However, the stock has fallen after the past four reports.
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Birinyi also said Apple beat 93 percent of the time since 2004, and its stock has traded higher 67 percent of the time, from the close prior to the report to 8 a.m. the next day, for an average gain of two percent. Even if Apple is higher after earnings, it has closed lower 67 percent of the time on the next day, with an average loss of 0.5 percent, Birinyi said.
Earnings expected Tuesday morning include Travelers, United Tech, Air Products, Peabody Energy, Ryder System, AK Steel, Freeport McMoRan, Illinois Tool Works, Altria, Valero Energy and TD Ameritrade, all before the opening bell. After the close, reports are expected from Apple AT&T, VMWare, Norfolk Southern, Panera Bread, Broadcom, and Discover Financial.
"Last week, we were all about financials, technology and industrials. This week, it's everything. It's open season. We're really going to run the gamut," said Hogan, adding companies that miss are getting punished but are not impacting the broader market. McDonald's, for instance, lost nearly three percent bit the Dow closed slightly higher even so, after the company signaled a weak second half.
As of Friday, 22 percent of the S&P 500 had reported earnings. Including companies that have not yet reported, earnings growth is expected to be about 3.1 percent. Sixty-four percent of the companies that reported beat on earnings per share, while 50 percent beat on revenue forecasts, according to Thomson Reuters.
The fireworks, meanwhile, were in commodities, where gold surged more than three percent Monday in its best move of the year, as the dollar continued to weaken. Treasury yields also moved lower with the 10-year at 2.48 percent.
David Gilmore, market strategist with FX Analytics, said he thinks the dollar's down turn is temporary.
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"I think the takeaway from last week with (Fed Chairman Ben) Bernanke's testimony, was the Fed is not going to press tapering to the point, where it undermines interest rates and sends them higher, derails the equity rally and creates a premature and unwanted appreciation in the dollar. Markets are less fearful of tapering than they were," he said.
The Fed has signaled it plans to start paring back on its $85 billion a month bond purchases before the end of the year.
"The notion that it's all going to get done by the end of the year is out the window. There will be some for sure, but September seems like it could be the starting point. They've done their best to convince people that tapering is not tightening," Gilmore said.
Tuesdays' data includes FHFA home price data at 9 a.m. ET. The Richmond Fed survey is released at 10 a.m. The Treasury auctions $35 billion in 2-year notes at 1 p.m.