Corporate earnings outlook lackluster

Earnings season begins Monday with U.S. companies facing a litany of issues that could make second-quarter reports look dismal.

Corporate outlooks are at their most negative in nearly four years and companies that have already reported have shown lackluster growth. Nearly two dozen S&P firms have already cited Europe's woes -- which seem to be worsening -- as a concern.

In addition, more than 85 members of the Standard & Poor's 500 index of blue-chip stocks lowered their earnings expectations in the past several weeks. The quarter's expected earnings growth of 5.8 percent is entirely due to Apple Inc. and a big earnings gain for Bank of America Corp. due to a mortgage settlement last year.

Most S&P 500 company results will come in the next four weeks, beginning with aluminum company Alcoa Inc., scheduled after Monday's market close.

The primary worry is whether the effect from Europe, along with the emerging slowdown in China, has been factored in to analyst estimates, which are down sharply since April.

Since the beginning of April, just two sectors have shown an increase in growth forecasts. One is telecommunications, which has no sales exposure to Europe, and technology, much of whose growth will come from Apple. -- Reuters