US braced for earnings whirlwind

THE earnings season hurricane hits Wall Street full force this week with more than a third of Standard & Poor's 500 companies detailing the extent of the damage from the final quarter of the toughest year in a decade.

Overall, earnings are expected to have fallen about 20% in the last three months of 2001, marking the fourth quarter in a row of plunging profits for America's biggest businesses.

Attention will be focused on what top executives say about the year ahead. The stock market has risen broadly in recent weeks on expectations of a sharp turnaround by the second quarter. If executives do not share the optimism, it could set up Wall Street for another series of steep estimate downgrades.

The flood begins on Tuesday with Intel and Wells Fargo. Intel is expected to report profits of 11 cents a share against 38 cents a year earlier. Wells Fargo is projected to eke out a small gain to 68 cents a share, from 65 cents.

Analysts say the financial sector should be among the quarter's leading performers as lower interest rates, brisk consumer lending and a pick-up in financial market activity helped improve the bottom line for many.

On Wednesday, some of the hardest hit firms will report, including General Motors and Compaq Computer. Compaq is expected to report a loss of one cent, compared with a gain of 30 cents in the year-earlier period. Apple Computer, by contrast, should show a gain of 11 cents a share against a loss the previous year. Citigroup, Ford, IBM and Microsoft lead the pack on Thursday.

In economic news, the headline and core rates in the Consumer Price Index out Wednesday are expected to drop 0.1%. Industrial production is thought to have risen a scant 0.1%. The Michigan Sentiment survey on Friday will be watched for signs that consumers remain encouraged and is expected to climb to 89.5 from 88.8.

supplied by Thomson Global Markets