Prime Time for Earnings Outlooks

Wall Street is gearing up for “confession season,” as companies use the week before Christmas to detail their New Year’s expectations. But investors hope it won’t spell a stocking full of coal for their portfolios.

It’s prime time for companies to issue earnings outlooks, just before the traditionally slow holiday week.

It may not be Christmas cheer. Analysts expect fourth-quarter earnings at companies in the Standard & Poor’s 500 to rise 14.9% from the year-ago period, according to market researcher Thomson First Call. That’s down from expectations of a 19.9% climb at the beginning of October.

So far, about 1,272 companies have offered their outlooks for the fourth quarter, according to Thomson First Call. Of that, about 43% have warned they will miss analysts’ targets, while about 330, or 26%, have forecast a better fourth quarter than Wall Street had predicted.

For the last week, the blue-chip Dow Jones industrial average and the broader S&P; 500 each slipped 2.5%. The tech-laden Nasdaq composite index dropped 4.2%.

With little more than two weeks left in the year, the Dow is down 16%, Nasdaq is off 30% and the S&P; 500 is down 23%.

Market watchers are keeping a close eye on four of Wall Street’s biggest banks -- Goldman Sachs Group Inc., Morgan Stanley, Lehman Bros. Holdings Inc. and Bear Stearns Cos. -- which report fiscal fourth-quarter earnings this week.

Most analysts expect the banks to post improved results. But that’s partly because their year-ago fiscal fourth quarter included a four-day U.S. stock market shutdown after the Sept. 11 attacks.