First Real Taste of First-Quarter Results

Wall Street will get its first taste of first-quarter earnings this week, and investor hopes are high that results will show corporate America remains on the road to recovery. It also is a shortened week, with the markets closed on Good Friday.

After a relatively quiet “confession” season -- the period at the end of each quarter when companies typically let Wall Street know if their results won’t measure up -- expectations are for solid profit growth.

Aluminum producer Alcoa Inc. on Tuesday will kick off this week’s key earnings reports as the first of the 30 companies in the blue-chip Dow Jones industrial average to issue results.

Results are also due later in the week from fellow Dow component General Electric Co., Internet media company Yahoo Inc., drug maker Abbott Laboratories Inc. and biotechnology giant Genentech Inc.

Wall Street analysts are expecting the companies in the Standard & Poor’s 500 index to post an average gain of 16.9% in their first-quarter operating earnings compared with a year earlier, according to Thomson First Call. That estimate has risen steadily since the beginning of the year, when the consensus first-quarter forecast was for a rise of 13.4%.

Still, it would be below the 28.3% profit gain of the fourth quarter of last year.

Sales growth for the S&P; 500 companies is expected to average 9% this quarter, according to analysts’ estimates. That would be down from 10.7% in the fourth quarter but on par with growth in the third quarter.

“We got through the pre-release season without any major concerns, and I think that most on Wall Street are optimistic that the earnings should come in pretty good for the first quarter,” said Peter Gottlieb, president of Gottlieb Investment Management Corp. “And I think the expectation is that the tone that would be set for the rest of the year will be pretty good as well.”

There are just a few economic reports of note this week, but investors will be watching carefully for signs the economy is maintaining its strength.

Among the reports on tap is the Institute for Supply Management’s non-manufacturing survey. This closely watched barometer of the service sector, due out today, is expected to show a rise to 61.5 in March from 60.8 in February, according to economists polled by Reuters and by Bloomberg News.

The service industries account for the biggest chunk of the economy.

Readings higher than 50 signal growth, and March would be the third consecutive month with an index higher than 60.

First-time claims for unemployment benefits are expected to drop by 2,000 to a total of 340,000 in the week that ended April 3.

The report from the Labor Department is due out Thursday. Claims reached a three-year low of 333,000 in the week that ended March 12.

“We’re feeling a little more bullish on the economy,” Ronald Sargent, chief executive of Staples Inc., the largest retailer of office supplies, said in an interview Friday. “Existing customers, mostly small businesses, are buying more, and that’s a good harbinger of jobs being created.”

Reports on import and export prices and wholesale inventories also will garner attention.