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US stocks may rise as earnings season starts

Stocks could rise next week if the first wave of quarterly earnings inject optimism about results for the period and on economic growth that has surprised on the upside.

business Updated: Jul 08, 2007 01:34 IST
Herbert Lash

Stocks could rise next week if the first wave of quarterly earnings inject optimism about results for the period and on economic growth that has surprised on the upside.

Alcoa Inc, the world's largest aluminum company, kicks off another earnings season on Monday, and results from the second quarter could surprise on the upside because of the weak US dollar.

"The earnings are going to surprise on the high side, mostly because the dollar has lost ground through the quarter and the analyst community always underestimates this effect," Milton Ezrati, senior economist and market strategist at Lord Abbett & Co.

On average, about half the earnings at companies that make up the benchmark Standard & Poor's 500 Index come from overseas, Ezrati said. When a foreign currency is strong, the conversion of earnings from abroad translates into more dollars.