But investors were also unnerved by reports suggesting a deflationary environment, sluggish consumer spending and weak sentiment. The University of Michigan's July consumer sentiment index Friday fell to the lowest point in almost a year, reflecting investor worries about the economic slowdown.
"The challenge going forward is the trading range we're in and the uncertainty about the domestic economy and the consumer," said Timothy Ghriskey, chief investment officer at Solaris Asset Management.
"We're seeing signs that corporations keep recovering but there's fear that we could roll back into recession again," he said. "While that's a long way away, if the consumer keeps weakening, it could become a self-fulfilling prophecy."
America's Best Places to LiveQuarterly results: This week brings results from nearly one-quarter of the S&P 500, including 12 Dow components. IBM (IBM, Fortune 500), Microsoft (MSFT, Fortune 500), AT&T (T, Fortune 500), Coca-Cola (KO, Fortune 500) and American Express (AXP, Fortune 500) are among the standouts on the Dow.
Other big names due include Apple (AAPL, Fortune 500), Wells Fargo (WFC, Fortune 500), Ford Motor (F, Fortune 500) and UPS (UPS, Fortune 500).
S&P 500 earnings are currently on track to rise 28% in the second quarter, while revenue is on track to rise 9%, according to the latest figures from Thomson Reuters. Full-year earnings are still expected to rise around 34%.
So far, about 75% of companies have beaten results on an earnings basis and 71% on a revenue basis. But with just 10% of the S&P 500 having reported results, the sample number is too small to draw any meaningful conclusions, said Thomson Reuters analyst Butters.
"The percentage is unusually higher versus the long-term average of about 62% of companies beating forecasts, but its pretty consistent with the last four quarters," he said.
The materials sector is expected to post the best year-over-year growth, with a forecast gain of 90%. Energy is second best, with expected growth of 74% versus a year ago. Tech is third and is expected to see growth of 59% year-over-year.
On the downside, the utilities sector is forecast to see profits fall 5% from a year ago. It is the only one of the ten economic sectors expected to see a decline from a year ago.
0:00/1:54How to save during hard timesEconomy: In addition to the profit reports, this week brings a spate of housing market reports. Standouts include June housing starts and building permits from the government, due Tuesday; and the existing home sales index for June from the National Association of Realtors, due Thursday.
Building permits, a measure of builder confidence, are expected to inch up to a seasonally-adjusted annual rate of 575,000 in June from a 574,000 rate in the previous month, according to a consensus of economists surveyed by Briefing.com. But housing starts are expected to have dropped to a seasonally-adjusted annual rate of 570,000 units from 593,000 in May.
Existing home sales are expected to have fallen to a rate of 5.04 million units in June from a rate of 5.66 million units in May.
In Washington, the Senate Banking Committee holds a hearing on monetary policy Wednesday with Federal Reserve Chairman Ben Bernanke due to testify. Also, President Obama is expected to sign the Financial reform bill into law sometime during the week.
On Friday, the results of the European stress tests are due for release. Amid ongoing concerns about the European debt crisis, the results could be a market mover.
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