NEW YORK – U.S. stocks may rise this week as investors shrug off tensions over Iran's nuclear efforts and focus on corporate earnings growth and news from the Federal Reserve on the economy, according to Wall Street experts.
Earnings reporting will accelerate, with many financial and technology names due to post quarterly results.
"Obviously the Iranian thing is a wild card and nothing's going to get resolved in the short term, but the earnings are really what's key to the market and any longer-term perspective," said Marc Pado, a market strategist at Cantor Fitzgerald & Co.
Fears about Iran's threat to halt U.N. nuclear inspections flattened out stock market gains last week, pushing the Dow Jones industrial average back below the 11,000 threshold reached early in the week.
Despite strong gains early, the week ended with the main indexes almost flat. The Standard & Poor's 500 index was up 0.17 percent to 1,288, the Dow was up 0.01 percent to 10,960 and the Nasdaq was up 0.50 percent to 2,317.
But earnings reports may give the market a kick-start this week, analysts' said.
Earnings at companies in the S&P are projected to have risen 14 percent for the fourth quarter of 2005, according to Reuters Estimates, but some analysts may have tempered their views after worse-than-expected results from aluminum producer Alcoa Inc. (AA), analysts said.
"The bigger picture for earnings is that we are going to be well into the double digits for the fourth quarter, and I'm not as concerned about the actual number as long as it's in that range," said Doug Cote, senior portfolio manager at ING Investment Management.
Technology heavyweights Intel Corp. (INTC), Yahoo Inc. (YHOO), Apple Computer Inc. (AAPL), and Advanced Micro Devices Inc. (AMD) are all due to report earnings.
Strong results from technology companies are possible as electronics were some of the most popular holiday gifts this season. Apple already announced this past week that its iPod music players had helped drive a 63 percent jump in holiday quarter sales. Korea's Samsung Electronics Co. Ltd. posted a better-than-expected 40 percent increase in quarterly profit on Friday.
But financial companies may not have such rosy reports. Many analysts expect U.S. banks to post lackluster fourth-quarter results, hurt by volatile interest rates, increased credit losses and a slowdown in mortgages.
Citigroup (C), Merrill Lynch (MER), J.P. Morgan Chase & Co. (JPM), Wachovia Corp. (WB) and other banks are due to report quarterly earnings this week.
General Electric Co. (GE), the world's largest company by market value and a component of the Dow, is also set to report.
"Nobody likes to fail in the fourth quarter," Cantor Fitzgerald's Pado said. "There are going to be companies that did well in the holiday season and they will be able to add to gains."
On the economic front, data about December industrial production, jobless claims, and housing starts will be released.
But investors will likely be most focused on Wednesday when the Federal Reserve's Beige Book and the December Consumer Price Index -- a key inflation measure -- are released.
Investors will likely pay close attention to the Beige Book's anecdotal information on current economic conditions for clues about how much longer the Fed will continue to raise interest rates.
"The Fed is a huge focus right now, if not most of the focus of what's going on in the market (in terms of) inflation, rates, whether the economy is going up or down," said Brian Williamson, vice president of equity trading at The Boston Co. Asset Management.
Short-term U.S. interest rate futures on Friday projected an increase to the fed funds rate at the Federal Open Market Committee's Jan. 31 meeting. Chances of a March hike slipped as low as 56 percent from 64 percent.
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