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Big earnings predicted in 4th quarter

A trader looks to the future at the New York Stock Exchange.

TEXT OF INTERVIEW

Steve Chiotakis: Aluminum company Alcoa kicks off earnings report season today, and analysts are expecting it to be a good one. They're predicting fourth-quarter earnings to move into positive territory for the first time in at least a couple of years. Marketplace's Sam Eaton is with us live in our Los Angeles studio to tell us about it. Good morning, Sam.

Sam Eaton: Morning, Steve.

Chiotakis: So how much of a milestone are we talking about here?

Eaton: Well basically it would mark the end of the earnings recession. So good news if you're a corporation or at least an investor in one. Analysts are forecasting a big bump in earnings, especially for technology companies. Now that bump isn't necessarily hard to come by though, considering fourth-quarter earnings a year ago were the worst in the history of the S&P 500 index. But with Thomson Reuters predicting a tripling of earnings for those stocks, the recent run-up in the markets starts to make a little for sense.

Chiotakis: All right Sam, so we've already mentioned Alcoa earnings coming out today. We've also got, what, Intel and JP Morgan Chase releasing earnings later in the week. What are investors looking for there?

Eaton: Well, they're going to want to see that those stock market gains I mentioned are warranted. The S&P 500 is now at a 15-month high, and investors are going to want to see earnings driven not only by cost cutting, but also by demand. Now the big question mark of course is in the banking sector. here investors will be looking for any signs that the age of these major write-offs against all those bad loans will be coming to a close.

Chiotakis: All right, Marketplace's Sam Eaton with us here in the studio. Sam, thanks.

Eaton: Thanks, Steve.

About the author

Steve Chiotakis was the host of Marketplace Morning Report until January 2012.

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