Fourth-quarter earnings season didn’t exactly start with a bang.
Alcoa (NYSE: AA), the aluminum giant that has long been the unofficial start to earnings season, fell shy of analyst estimates last Thursday. Forecasters were predicting EPS of 6 cents per share; Alcoa only managed 4 cents per share. The stock has since fallen nearly 6% in just two trading days.
Because of its place in the manufacturing sector, Alcoa is considered a stock market bellwether. As it goes, so goes the rest of earnings season.
We’ll know more this week if that’s the case. All of the big banks report Q4 earnings, beginning today with JPMorgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC).
Though Alcoa earnings are often a harbinger of what’s to come, big bank earnings are far more important. The banks have been the leaders in this ongoing bull rally. Improved earnings have helped, as the six largest U.S. financials have routinely beat analyst estimates over the last couple years.
One reason for all the beats is that expectations for big bank earnings remain muted in the aftermath of the recession. And with good reason. Bank of America (NYSE: BAC), for example, posted EPS of just $0.65 over the last four quarters – a mere fraction of the $4.59 the company was earning per share in 2006.
Still, bank shares have steadily risen by regularly beating low earnings estimates.
We’ll find out this week if they can continue to beat those expectations. Here is a list of who’s reporting Q4 earnings and when – banks or otherwise:
- Wells Fargo
- JPMorgan Chase
- Bank of America
- Goldman Sachs (NYSE: GS)
- Intel (Nasdaq: INTC)
- Citigroup (NYSE: C)
- Morgan Stanley (NYSE: MS)
- General Electric (NYSE: GE)