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Earnings season may be only half over, but the focus on profits should subside this week as investors turn their attention to the coming election and Friday's jobs data - the last major economic indicator before the November 6 contest.
More bellwether companies are set to report results in what will be another "peak week" of the earnings season. Such a flurry of numbers normally holds Wall Street's attention, and it can lead to market swings. But volume and volatility may be slight this week, with market participants opting to remain on the sidelines ahead of the jobs data and the election.
The U.S. government's October jobs report will give a snapshot of the current labor market. It could also give a bit of a lift to President Barack Obama, should it come out better than anticipated, or help Republican candidate Mitt Romney - if it is worse than forecast.
Polls currently indicate that President Obama is a slight favorite to win on November 6, but the race will be tight. The most recent Reuters/Ipsos poll of likely voters shows the president ahead - 47 percent to 45 percent.
The Standard & Poor's 500 Index fell 1.5 percent last week, largely because of a spate of earnings disappointments. The Dow Jones industrial average slid 1.8 percent last week, and the Nasdaq composite index dropped 0.6 percent.
What is notable, however, is that rebounds have been brief and quick to attract sellers.
Some investors cited the approaching election as a barrier to committing new capital to the market.
"Not many people have the stomach to plop down their bets when polling is so close," said Hayes Miller, the Boston-based head of asset allocation in North America at Baring Asset Management. "For the most part, investors will wait and see what happens."
Miller, who helps oversee more than $50 billion in assets, said the trend of caution would be especially pronounced in the health care <.GSPA>, financial <.GSPF> and energy <.GSPE> sectors - three areas that may face different regulatory outlooks, depending on the election's outcome.
"These are the ones really in play," he said.
Expectations for the nonfarm payrolls report, set for release on Friday, are by no means certain, either. Analysts expect 124,000 jobs were added in October - up 10,000 from September. However, the unemployment rate is also seen ticking higher - to 7.9 percent from 7.8 percent.
A payroll surprise in either direction could further cloud expectations for the election's outcome.
"A big change in payrolls could cause some uncertainty over the winner," said Jerry Harris, president of asset management at Sterne Agee, in Birmingham, Alabama. "I don't expect a big surprise, but while the S&P doesn't seem especially vulnerable at these levels, I don't think it is in a hurry to go up, either."
The market will also have to contend with the weather. Hurricane Sandy is expected to hit the eastern third of the United States, including the East Coast, by Monday night with torrential rains, high winds, major flooding and power outages. In New York, officials will close the city's bus and subway lines, and commuter railroads at 7 p.m. EDT Sunday. Decisions have not been made whether to close bridges and tunnels leading to Manhattan in preparation for the storm's arrival.
At the New York Stock Exchange, the plans call for business as usual. The exchange issued a statement saying it has contingency plans to have the market running, adding that it has back-up power generation facilities. The Big Board will make accommodations for critical staff and traders.
Rival marketplace NASDAQ OMX said in a statement that it plans to make sure its systems are ready. It will communicate with its members before, up to and after the storm.
EARNINGS IN PLAY, IF NOT IN FOCUS
While the market at large may be waiting on news events, individual stocks could still be volatile as earnings season grinds along. More than half of the S&P 500 components have reported results so far. This week, though, will bring reports from some marquee names such as Dow components Chevron
This earnings season, a number of high-profile companies have missed estimates, including sour notes last week from Apple Inc
With 54 percent of the S&P 500 companies having reported results so far, 62.5 percent have topped earnings expectations, under the 67 percent average over the past four quarters. Just 37 percent have topped revenue forecasts, well under the 55 percent over the past four quarters.
The earnings disappointments led to some intensive selling, driving the Dow industrials down 243.36 points last Tuesday.
The S&P 500 has ended down in five of the past seven trading sessions. Those declines have pushed the benchmark S&P under its 50-day moving average of around 1,434, leading some analysts to believe it may be ready for a bounce.
"We'll use any pullback as an opportunity to buy," said Chip Cobb, senior vice president at Bryn Mawr Trust Asset Management in Bryn Mawr, Pennsylvania. "Even though we've seen a number of companies miss expectations and be overly cautious, we're focusing on how a majority have beaten."
Cobb said he was especially looking to results this week from U.S. Steel Corp
"Steel companies have been participating really poorly, and I'm anxious to see if that will continue," he said.