Earnings season may turn up some stock market winners after December's battering


After the market's December meltdown, earnings season could turn up some winners among the rubble, analysts said.

What fourth quarter results will do for the market's rebound from December's trough is tough to say, given other factors, like trade talks, Washington dysfunction and the UK's upcoming Brexit vote. But analysts do see some potential for positive reactions in individual stocks, even with the diminished expectations for 2019 earnings. 

Fourth quarter reporting season kicks off this week with major banks Citigroup on Monday, J. P. Morgan on Tuesday and Bank of America and Goldman Sachs on Wednesday. There are a few important data releases, like PPI Tuesday and industrial production Friday, but reports on retail sales and housing starts have been delayed because of the three-week-old government shutdown.

Analysts expect earnings to be fairly strong, but are watching to see what companies say about the current quarter and the rest of the year, given expectations for a slower growing economy and lower profit growth.

After a 10 percent rebound off the Christmas Eve low, the S&P 500 is bumping up against a major area of resistance at 2,600 as earnings season begins. The S&P 500 was trading slightly lower at around 2,590 on Friday afternoon.

"In our view the bulk of the decline is clearly behind us," said Julian Emanuel, chief equity and derivatives strategist at BTIG. Earnings could boost the overall market, but there are also geopolitica....

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