Companies fired "whale" losses, clawbacks and profit warnings at the market this week, building anticipation for next week, when earnings season swings into high gear.
“We’ve seen a lot of pre-announcements and profit growth is definitely slowing,” said John Fox, co-manager of the FAM value fund.
According to data from Thomson Reuters, analysts on average expect earnings for the S&P 500 to grow 6.5 percent in the second quarter. That’s down from 9.1 percent growth forecast back in April.
Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America Merrill Lynch, noted that “What we’ve seen from company guidance suggests that stocks with more foreign exposure are starting to look riskier.”
Chip maker AMD , for instance, warned that sales may decline 11 percent from the first quarter,reflecting weakness in Europe and China. Earnings from Intel will be scrutinized next week following the AMD preannouncement and a warning from chip-equipment maker Applied Materials .
Qualcomm, Google, Microsoft and flash-drive maker SanDisk are also slated to report earnings next week.
Stephen Gallagher, head of research at Société Générale, told CNBC’s “Closing Bell” on Friday to watch consumer discretionary earnings for clues to the health of the economy.
Profit margins for consumer discretionary companies like the autos “probably faded a bit in the second quarter,” Gallagher said, but he expects to get indications about whether the consumer is holding up and gaining strength going into the third quarter.
He’s also watching financials. Citigroup, Bank of America, Morgan Stanley and Goldman Sachs will be reporting earnings. On Friday, mortgage originations and better credit quality helped Wells Fargo
Several regional banks will also be reporting next week, including BB&T, PNC Financial, Sun Trust and US Bancorp.
A handful of Dow components report, including Coca-Cola, General Electric and Verizon.
A complete earnings calendar can be found here.
Gallagher said it’ll be time to get into the equities for the longer term at the end of the summer. He pointed to industrial and energy names. “They have a lot of upside going into the remainder of the year,” he said.
— JeeYeon Park contributed to this report.