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What to watch into earnings season

Financial markets sputtered out a slight rally Monday, dipping in and out of negative territory to close up less than 0.3 percent in one of the lowest-volume days of the year. But the week is expected to ramp up as public companies report earnings starting Tuesday, leaving investors to see how well companies have grappled with the challenges of the third quarter.

So what's at the top of analysts minds' as companies in their portfolios are set to report? Energy, pharmaceuticals, the Federal Reserve and consumers, according to comments on CNBC's "Power Lunch" Monday.

Energy: Up for debate

With energy prices volatile, analysts watched the struggling sector for signs of a sustained rally Monday.

After rallying 9 percent last week, oil prices pared gains Monday, with indicators like the Energy Select Sector SPDR Fund closing down more than 1 percent. Last week's brief uptick was not enough to convince Zachary Karabell, Envestnet head of global strategy, to be positive on energy.

"I just think we are in a multiyear period of really, really low commodity demand," Karabell told CNBC's "Power Lunch" Monday.

On the other hand, Roberto Friedlander, Brean Capital head of energy trading, said he thinks the energy rally can continue, arguing that most bottoms begin with names that are highly short sold on the way down.

Pharmaceuticals: Ride it out

Pharmaceutical stocks Eli Lilly and Merck closed down almost 8 percent and 0.5 percent, respectively, after news that Eli Lilly would discontinue trials of a cholesterol drug, similar to one being developed by Merck.

But with positive developments in Eli Lilly's treatments for diabetes and Alzheimer's, Tony Butler, Guggenheim Securities analyst, said investors should be sufficiently risk-adjusted to weather Monday's turbulence.

"Previous drugs from Roche and Pfizer had failed. One should not have made the assumption this was an unrisky program," Butler said.

Though investors are skeptical of Eli Lilly, Butler said the pharmaceutical company is still worth investors' money. It has some Alzheimer's drugs in the pipeline and recently discovered a risk reduction in cardiovascular events from diabetes drug it manufactures, Butler said.

Federal Reserve: Watch the US dollar

As China tries to reset its growth rates and expectations going forward, Brian Kloss, Brandywine Global Investment Management portfolio manager, said he is watching the impact of the U.S. dollar on companies with dollar-denominated debt.

"We do think the Fed will raise rates in the next six months," Kloss said. "We tend to own many global assets in nature ... and we are starting to think about whether or not the dollar has reached its peak."

Consumers: In 'great shape'

Outside of corporate earnings, economic data on retail sales and consumer sentiment is slated to be boosted by improvements in the labor market, Mark Luschini, Janney Montgomery Scott chief investment strategist, told CNBC. Both indicators are expected to rise modestly, according to estimates by economists at Thomson Reuters.

With banks reporting earnings Tuesday, Luschini said they would serve as a broad-based indicator of economic conditions.

"We think the consumer remains to be in great shape and will continue to be, given improvements we've seen in the labor market," Luschini said. "All in, I believe the U.S. economy will stay sturdy in spite of what's happening in overseas markets."

Dave Donabedian, Atlantic Trust chief investment officer, also said he expects the economy to end the year on a high note.

"I don't think it will be smooth, and I don't think it will be easy," Donabedia said. "Ultimately, we are in what we think is a durable economic expansion, led by domestic demand at here at home. That's a huge input into the corporate profit cycle. So we think the market is in relatively good stead here."