A Busy Week Expected for Earnings Warnings

A slew of companies are expected to tell investors this week that they will miss profit forecasts because of the soft economy. Investors’ likely response? Snapping up shares and sending stock market indexes higher, pundits said. “This period reflects spring cleaning by a number of companies trying to get the skeletons out of their closets,” said Ned Riley, chief investment strategist for State Street Global Advisors, which oversees $720 billion. “But portfolio managers are looking beyond that shock value. The ingredients for a bottom are here.” Some investors, taking their cues from last week’s high trading volumes, are starting to sense the stock market can only go up from here. The coming week marks one of the busiest periods for potential earnings “warnings,” when companies announce they may not reach quarterly targets. Still, many investors said they already anticipated bad news, and they’re jumping into some of the most beaten-down stocks. Last week, the Nasdaq composite index closed up, ending a seven-week losing streak. Still, future gains may be limited if comments by Federal Reserve Chairman Alan Greenspan this week suggest the Fed may not lower interest rates again before its next meeting. Some investors believe a fourth cut could come soon to boost the economy and stocks. Greenspan and Treasury Secretary Paul H. O’Neill are addressing the National Assn. of Business Economics on Tuesday.