Earnings, oil and rates to drive stocks

Earnings season gets in full swing this week, when stock investors will comb through scores of corporate report cards to check the US economy's pulse.

At the same time, investors hope oil prices will slip further from the record $58.28 a barrel hit early last week.

And they will pay close attention tomorrow to the Federal Reserve's minutes from its March 22 policy-makers' meeting. They will be looking for hints about the pace and size of future interest-rate increases.

The dollar will bear watching before release of US international trade deficit data tomorrow. Economists see the nation's February trade deficit widening to $59 billion from $58.27 billion previously, according to a Reuters poll. A wider trader gap could hit the dollar, which in turn may scare foreign investors into pulling some money out of US assets like stocks and bonds.

But Wall Street's biggest preoccupation will be earnings. "In the week ahead, the earnings season begins in earnest, with the market anticipating a decelerating rate of growth," said Jerome Jacobs, senior strategist at Putnam Investments. "So the market has the right level of skepticism priced in."

On Friday, stocks fell. But the major indexes ended the week higher, with the blue-chip Dow Jones industrial average up 0.55 per cent. The broad Standard & Poor's 500 Index gained 0.71 per cent and the tech-laced Nasdaq Composite Index climbed 0.73 per cent for the week.

Some big names are scheduled to report earnings this week, including Apple Computer Inc. on Wednesday, PepsiCo Inc. on Thursday and two Dow components, Citigroup Inc., and General Electric Co., on Friday. Last year's earnings bonanza, when low interest rates and tax cuts helped create heady growth of around 20 per cent, will almost certainly not extend into this year, analysts said.

Consensus expectations are for first-quarter earnings growth of around eight per cent, according to Reuters Estimates. Some strategists are forecasting a number closer to nine per cent, but expectations of a double-digit rise are scarce.

By Friday's close, US crude futures prices had fallen almost $5 a barrel from the all-time high of $58.28 set on Monday. NYMEX crude for May delivery settled on Friday at $53.32 a barrel, down 79 cents for the day.

The drop in oil prices relieved some worries that higher energy costs will hurt corporate profits and consumer spending. In turn, the sliding crude prices helped drive a four-day rally in both the Dow and the S&P 500.