Earnings numbers have been largely positive this season, with 74 percent of reported earnings coming in above estimates, according to data from Thomson Reuters I/B/E/S. But some traders say bad news could be right around the corner.
"Even though we've had positive surprises on the earnings side, six out of the 10 sectors have shown disappointment on the sales side," Gina Sanchez of Chantico Global said Friday on CNBC's "Power Lunch." "Some of those sectors really are being dragged down by energy."
Despite huge year-to-date selloffs in the sector, energy still composes about 8 percent of the S&P 500. The energy sector is expected to be the biggest weight on earnings, and is projected to report a 57.4 percent decline in earnings year over year, according to FactSet.
Moreover, Sanchez said the positive earnings numbers have largely been because of low expectations leading up to earnings season. Although companies are on track to reach modest overall growth for the second quarter, Sanchez said disappointing sales numbers could hit earnings hard.
"We have to keep an eye on that. We don't expect that this will be a strong growth cycle yet," she said.
Kathy Lien of BK Asset Management said earnings could get worse later this year as the Federal Reserve looks to raise interest rates. This could lead to further gains for the dollar, which has hurt companies already this quarter in international sales.
"While we do have a lot of upside surprises in earnings, I think we've seen a lot of companies also attribute some of their weakness to the stronger dollar," Lien said Friday.
The U.S. dollar is up 7 percent year to date. Lien said she sees another 8 percent rally if the Fed decides to start raising rates this year.
"All that is going to create headwinds for multinational U.S. companies," Lien said. "I think this is going to become a larger issue going forward."
A total of 186 firms in the S&P 500, or 37 percent of the index, released second-quarter earnings by Friday. On tap to report earnings this week include Twitter, Facebook, BP, Ford, Barclays and Time Warner Cable, among others.