Stock investors, get ready for big bank earnings

Stock investors, get ready for big bank earnings
J.P. Morgan, Citi, Goldman reports could bring some life back to the market
SAN FRANCISCO (MarketWatch) — The first solid week of earnings will wear banker’s stripes. For the stock market, that should be a good thing. But that earnings jolt may not last.

Big banks are expected to bust out some of the best bottom-line results of the season, and a lot of those come out this week. Of the 25 companies on the S&P 500 Index (SNC:SPX) that are scheduled to report quarterly earnings this week, 17 belong to the financial sector. Half the six Dow Jones Industrial Average (DJI JIA) components reporting this week are financial firms.

Much like in the third-quarter, the financial sector is expected to have the best earnings growth in the fourth quarter, with an estimated growth rate of 22.6%, according to John Butters, senior earnings analyst at FactSet. S&P 500 earnings as a whole are expected to grow 6.1%. Without the contribution of the financial sector, expected growth is 3%.

“When any one sector creates the majority of growth, everything else is very vulnerable to that sector,” said Brad McMillan, chief investment officer for Commonwealth Financial. “If the mortgage market slows down, then corporate earnings growth goes away.”

Still, a string of strong reports from the banks could provide investors with a new reason to buy into a rally that faltered a little in the last week. http://www.marketwatch.com/story/stock-invest...beforebell