Earnings Preview: Who's Hot - And Who's Been Burnt

Includes: BBI, GE
by: Grace Cheng

Last week ended on a bad note for the stock markets as General Electric’s (GE: 32.05 -4.70 -12.79%) large drop in profits reminded investors that the worst may not be over: The Dow fell around 2.25% in large part due to GE, the S&P 500 fell by 2.74% and Nasdaq closed down by 3.41%.

This coming week we’ll see some major financial firms announce their earnings: JP Morgan (NYSE:JPM), Merrill Lynch (MER), and Citigroup (NYSE:C) will all be telling investors how good or bad they did this last quarter. Most market participants believe their earnings won’t be very good and we’ll have to see what happens with the other big companies reporting next week such as Johnson & Johnson (NYSE:JNJ), IBM (NYSE:IBM), and Caterpillar (NYSE:CAT).

Investors will be wondering if Caterpillar’s profits will be down due to less demand from the construction sector, or if it will have managed to make up for that decline by demand from commodity-based outfits. IBM will also be seen as a bellwether in the technology sector, and they will be wondering if IBM has managed to keep its edge in these market conditions.

So who’s hot and who’s been burnt? So far we’ve seen a lot more burnt than hot, but if these companies can show that they’ve managed to keep up with analysts’ expectations, we may see some optimism return to the markets. If, however, these major players miss estimates as their counterparts have done, then the market might decide it hasn’t hit a bottom and continue its downward slide.