Reply #5: Strong stocks face earnings test

[ozymandius]

NEW YORK (Reuters) – U.S. stock investors will watch the earnings numbers flow in this week to see how much momentum the rally can get from early profit reports.

The first-quarter figures come as the three major U.S. stock indexes finished a sixth straight week of gains, the best string since the rebound from 12 1/2-year lows in March 2009, and the Dow briefly popped above 11,000 late on Friday.

Those gains could make it tough for stocks to rally further, even with expectations, according to Thomson Reuters, for Standard & Poor's 500 (.SPX) companies' first-quarter earnings to rise 36.8 percent from a year ago. ....

Much stronger-than-expected earnings have helped propel the S&P 500 more than 75 percent from the March 9, 2009, closing lows. But in the last earnings season, stocks actually lost about 3 percent as investors sold equities despite strong results.

Some 72 percent of companies beat earnings estimates in the fourth quarter, down from a record 79 percent in the previous quarter, but still well above the 61 percent in a typical quarter, Thomson Reuters data showed.

http://news.yahoo.com/s/nm/20100411/bs_nm/us_usa_stocks_weekahead