Markets Focus on Q1 Earnings Results – Economic Highlights

To make matters worse, Q2 expectations are coming down as well. What was expected to be 5.3 percent earnings growth among S&P 500 companies has now slipped to -1.9 percent, with plenty of time for further downward revisions.

Obviously, lower oil & gas prices is playing a significant role here. While lower energy prices may be good for consumer discretionary spending, a whole slew of industries reliant on higher energy prices (to supply updated pipes, mining, oilfield services and other infrastructure) looks to be taking a big bath as calendar 2015 earnings season gets underway this week.

The ISM Services Index report is expected later this morning, and hopes for a big pickup are nonexistent there, either.

All this before even mentioning the weak March nonfarm payroll numbers, which were well below expectations. While the past several months have produced more than (in some cases well more-than) 200K jobs per month, March’s 126K was paltry by comparison. Analysts do tend to consider this weak number weather-related — meaning jobs reads in future months (reliant on improved spring weather) should improve, and perhaps even make back those jobs gains we expected to see for March.

A big piece of the overall economic puzzle will be Q1 earnings season, which “unofficially” kicks off with Alcoa’s (AA) earnings report on Wednesday. We’ve already seen quarterly earnings reports from globally important companies like FedEx (FDX) and Oracle (ORCL) a couple weeks ago — both of which beat earnings estimates, by the way — but once Alcoa reports, the floodgates open up: financial companies followed by tech followed by every other industry under the sun.

Investors have been bracing themselves for bad news on the earnings front this quarter (and next). This may open the door for positive news providing an upward pouch for stock prices. For now, however, we’re looking at down futures for the week. But stay tuned.