Earnings deluge may stall Wall Street rally

By Leah Schnurr

NEW YORK (Reuters) - A torrent of earnings this week threatens to swamp Wall Street's impressive rally, as results so far have shown the corporate outlook remains murky and investors worry that better-than-expected results from banks still don't prove the sector is stable.

Investors will get a look at the performance of a swath of major companies, including everything from Wells Fargo(WFC.N) to Caterpillar(CAT.N), providing a broad look at the economy's health.

The market has been particularly sensitive to bank earnings after their dire straits brought the market to a 12-1/2 year low in early March. The latest quarter has come under increased scrutiny after dismal fourth-quarter results that showed the economy was gripped by panic at the end of last year.

Last week, Goldman Sachs (GS.N), JPMorgan Chase & Co (JPM.N) and Citigroup (C.N) all reported better-than-expected results for the first quarter, but analysts were wary of the results' sustainability and said they did not signal an all clear for the sector at the heart of the economic crisis.

"I think the market is somewhat skeptical on these better-than-expected financial earnings and are looking forward to getting more detail on that," said Scott Wren, senior equity strategist at Wachovia Securities in St. Louis.

Earnings for S&P 500 companies are expected to decline 37.4 percent in the quarter, according to Thomson Reuters data, with all 10 sectors taking a hit.

Economic indicators will be relatively light in the coming week, keeping earnings on center stage. But investors will be looking at data on new and existing home sales, as well as durable goods orders to see if the reports can extend the optimism sparked last month by signals that the economic slump may be waning.

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