(Repeating column transmitted late Thursday, Friday)
By Denise Duclaux
NEW YORK, April 20 (Reuters) - This week marks the most frenetic period of the first-quarter earnings season, but questions over how the rest of the year unfolds could keep stock moves on the quiet side, analysts said.
"I expect the market to tread water," said Alan Ackerman, a market strategist at brokerage Fahnestock & Co. "The economy is going nowhere fast. We're in a jobless economic recovery and continue to see companies limit their capital spending."
Such concerns over the health of the nation's economy and corporate profits have swiveled back into the spotlight now that the war in Iraq has wound down. Investors are demanding clear evidence of solid growth after three straight years of brutal losses in the market.
"People are trying to anticipate how much bounce we're going to get," said Henry Herrmann, chief investment officer at Waddell & Reed, which oversees about $28 billion. "They're going to be looking for every little hint."
One-third of the Standard & Poor's 500 companies will post earnings this week and, if they follow the recent trend, they will top analysts' lowered expectations. In addition, an advanced read on gross domestic product this week could show better growth in the first-quarter this year than in the fourth quarter of 2002.
But investors, forever looking ahead, are seen shrugging off the numbers as yesterday's news when they return from their three-day holiday weekend on Monday.
"The key to the market is the quarters to come," said John Davidson, president and chief executive officer at PartnerRe Asset Management, which oversees more than $5 billion.
On Thursday, when trading ended for the holiday-shortened week before the long Easter holiday weekend, all three major stocks indexes rose. The blue-chip Dow Jones industrial average climbed 1.6 percent, while the technology-rich Nasdaq composite index surged 4.9 percent, and the broad Standard & Poor's 500 index advanced 2.9 percent. The markets were closed on Friday for Good Friday.
HECTIC WEEK OF EARNINGS
More than 160 S&P 500 companies have posted quarterly results so far this earnings season, beating expectations by an average of 6.4 percent, according to Thomson First Call.
But the numbers are leaving some analysts cold.
"Considering how easy the comparison was, I don't think you can see much in most of the quarterly numbers that suggests that anything fundamentally has improved," Herrmann said.
The companies have posted earnings growth of 9 percent for the first quarter compared with the year-ago period, the research firm said. Analysts have raised their estimates over the past few days and are now forecasting earnings will rise 10.2 percent in the first quarter, according to First Call.
"Unfortunately, people are going to be disappointed because it's going to be mostly from cost cutting," said Edgar Peters, chief investment officer at PanAgora Asset Management, which manages about $13 billion. "They're waiting for some inkling that revenues are increasing, and we're not getting much of that."
Companies are also proving hesitant to offer concrete outlooks for coming quarters, still struggling to gauge demand in an uncertain economy just beginning to emerge from the shadow of war.
"Once again, it's going to be the quality of earnings and visibility of earnings ahead," Ackerman said. "Companies have been cautious in talking about visibility, and we're likely to see more of the same (this) week."
This week will be chock full of earnings from big names, including industrial conglomerate 3M Co. , drug maker Merck & Co. Inc. , online auctioneer eBay Inc. , oilfield services company Schlumberger Ltd. , airline owner AMR Corp. , media giant AOL Time Warner Inc. , phone companies AT&T Corp. and SBC Communications Inc. . film company Eastman Kodak Co. , jet maker Boeing Co. and telecom gear supplier Lucent Technologies Inc. .
FIRST GLIMPSE OF Q1 GROWTH
This week Wall Street will get the advanced reading on first-quarter gross domestic product, which measures the value of all goods and services produced within U.S. borders, on Friday. Economists polled by Reuters are expecting growth of 2.3 percent in the January-to-March period versus a gain of 1.4 percent for the October-to-December quarter of last year.
But investors are more interested in how the following quarters will shake out for the economy after the dust settles from the U.S-led war against Iraq.
"Unless it is much stronger or much weaker, (the GDP) is going to be a yawn," said Stanley Nabi, managing director at Credit Suisse Asset Management, which oversees about $55 billion in North America.
Market watchers say investors will pay more attention to Thursday's weekly jobs report. Weekly jobless claims for the week ended April 19 are expected to dip to 425,000 from 442,000.
First-time jobless claims rose to a seasonally adjusted 442,000 for the week ended April 12. It was the ninth straight week that claims held above the key 400,000 level, regarded by economists as a sign of an unhealthy labor market.
This week also brings reports on durable goods orders, new and existing home sales, and consumer sentiment data from the University of Michigan. (With additional reporting by Elizabeth Lazarowitz, Vivian Chu)
(Wall Street Week Ahead runs every week. Comments or questions on this column can be e-mailed to [email protected])