After series of letdowns, Wall St. braces for 2nd-quarter earnings

Investors battered by surging energy prices, disappointing economic data and the ongoing credit crisis will have something else to worry about this week – second-quarter corporate results.

The unofficial start to earnings season takes place Tuesday when aluminum producer Alcoa Inc. posts results. General Electric Co. on Friday will also be among the companies reporting.

The pair of Dow Jones industrials could give Wall Street a glimpse of what to expect when hundreds of other companies report results throughout the month. Not only are investors concerned that companies can't beat already lowered expectations, but they'll also be focused, undoubtedly with some skepticism, on what corporate executives forecast for the second half of 2008.

“The earnings, which are a reflection of the economy in general, have been going down and unfortunately there's a lot of concern it will go down a lot more,” said Howard Silverblatt, Standard & Poor's senior index analyst. “How long can they continue through the storm? Nobody believes the ‘worst is behind us' comments from the CEOs because they can't predict where this economy is going.”

Earnings from members of the S&P 500 are forecast to be down 10 percent for the second quarter. The nation's banks and brokerages are likely to lead the pullback with another disappointing quarter.

Companies like Merrill Lynch & Co. and Citigroup Inc. are again expected to write off billions of dollars of assets rendered nearly worthless because of the global credit crisis. Since last year, banks have written down nearly $300 billion – and that is not expected to let up.

Financial stocks last year contributed $60.7 billion of earnings to the overall S&P, and this time around the number is expected at $24.6 billion, according to S&P. And, in a demonstration of how dominant financials are, Silverblatt said earnings for the S&P 500 would rise 9 percent during the second quarter if banks and brokers were stripped out of it.

Wall Street finished last week with another decline, with the Dow Jones industrials down 0.51 percent, the Standard & Poor's 500 index down 1.21 percent and the Nasdaq composite index down 3.01 percent.

While that was a less steep drop compared to the week before, investors clearly are showing dissatisfaction with the economy – especially higher energy prices.

Investors are expected to remain anxious this week as crude oil approaches $150 a barrel. On Thursday, oil touched a trading high of nearly $146 before it settled at a record $145.29.