Rally's fate turns on bank results

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Rally's fate turns on bank results

Sun Apr 12, 2009 2:04pm

By Ellis Mnyandu

NEW YORK (Reuters) - If Wells Fargo's (WFC.N) upbeat first-quarter performance is any sign, Wall Street could rally further next week on any reassuring news from three other big banks due to post quarterly results.

The latest earnings season gets under way in earnest in the coming week, with four components of the Dow Jones industrial average, including JPMorgan (JPM.N), among companies set to report their latest scorecards.

General Electric (GE.N), a conglomerate whose results and outlook may shed light on the state of the broader economy, is scheduled to report earnings next Friday.

Goldman Sachs Group Inc (GS.N), which converted from an investment bank to bank holding company status last September after Lehman Brothers collapsed, will release quarterly earnings on Tuesday...

Looking ahead, JPMorgan is due to report results on Thursday and Citigroup (C.N) on Friday...

With the economy mired in a protracted recession, investors are eager to see if banks have again begun lending to consumers and businesses, whose spending would serve as a crucial underpinning to an economic recovery...

"The short-term momentum is still bullish. This move off the March lows probably has more legs to it," said Bill Strazzullo, partner and chief market strategist at Bell Curve Trading in Boston...

The backdrop for some of the wariness is the recent slide in the CBOE Volatility Index .VIX, or VIX, commonly known as Wall Street's fear gauge. On Thursday, the VIX marked its lowest close since September 2008, the month that forever changed the face of Wall Street when Lehman Brothers failed...

"In our opinion, this is still a bear market move," Strazzullo said. "So you've got to be careful. It's been a great run over a short period of time, but we don't see it as a bigger picture change in trends, so I don't want to get careless -- not at these levels."...

Besides the earnings frenzy, next week's economic calendar is packed. Highlights include March retail sales on Tuesday, along with the March Producer Price Index, followed by the March Consumer Price Index on Wednesday, along with the Federal Reserve's Beige Book, a snapshot of regional economic conditions.

Weekly jobless claims, March housing starts and the Philadelphia Federal Reserve's report on April Mid-Atlantic factory activity are all due on Thursday. For the full economic diary, click <ECI/US>

(Additional reporting by Leah Schnurr and Edward Krudy; Editing by Jan Paschal)

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