Wall Street loses ground as earnings season starts

NEW YORK (Reuters) - U.S. stocks fell on Tuesday as the market consolidated from last week's rally on the "fiscal cliff" deal in Congress and investors awaited the start of the earnings season with lowered expectations.


Profits in the fourth quarter are seen above the previous quarter's lackluster results, but analysts' current estimates are down sharply from where they were in October. Quarterly earnings are expected to grow by 2.7 percent, according to Thomson Reuters data.


The benchmark S&P index has fallen 0.7 percent in the wake of the 4.3 percent jump in the two days surrounding the conclusion of the fiscal cliff debate, and investors have found few catalysts to extend the brief rally.


"The path of least resistance at the moment is lower just because we had that explosion to the upside after (the debate) in Washington," said Ken Polcari, director of the NYSE floor division at O'Neil Securities in New York.


"People are concerned about earnings," Polcari said, adding that other worries include raising the federal debt ceiling and automatic spending cuts set to take effect in weeks unless Congress acts.


"You are going to get this kind of apathetic market until we start to see what earnings look like," he said.


In Tuesday's results, Monsanto Co shares rose 2.6 percent to $98.46 after hitting a more than four-year high at $99.99. The world's largest seed company raised its earnings outlook for fiscal 2013 and posted strong first-quarter results.


Education provider Apollo Group and Dow component Alcoa Inc , the largest U.S. aluminum producer, round out the start of earnings season after the closing bell.


The Dow Jones industrial average <.dji> dropped 66.38 points, or 0.50 percent, to 13,317.91. The Standard & Poor's 500 Index <.spx> lost 7.88 points, or 0.54 percent, to 1,454.01. The Nasdaq Composite Index <.ixic> shed 17.31 points, or 0.56 percent, to 3,081.51.


AT&T Inc , which fell 1.8 percent to $34.30, was the biggest drag on the S&P 500 after the company said it had sold more than 10 million smartphones in the quarter, topping the same quarter in 2011 but also increasing costs for the wireless service provider.


Providers like AT&T pay hefty subsidies to handset makers so that they can offer device discounts to customers who commit to two-year contracts. Rival Verizon Wireless said on Monday it had its strongest fourth quarter ever.


The S&P telecom services index <.gspl>, down 2.8 percent, was the worst performing of the 10 major S&P sectors.


Shares of restaurant-chain operator Yum Brands Inc fell 4.5 percent to $64.82 a day after the KFC parent warned sales in China, its largest market, shrank more than expected in the fourth quarter.


Sears Holdings shares slumped 5.4 percent to $40.59 a day after the company said Chairman Edward Lampert would take over as CEO from Louis D'Ambrosio, who is stepping down due to a family member's health issue. The U.S. retailer also reported a 1.8 percent decline in quarter-to-date sales at stores open at least a year.


GameStop shares dropped 4.8 percent to $23.57 as the worst performer on the S&P 500 after the video game retailer reported sales for the holiday season and cut its guidance.


(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)



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Target to match some rivals’ online prices year-round






(Reuters) – Target Corp said on Tuesday it will match on a year-round basis the prices found on the websites of key rivals Amazon.com Inc, Best Buy Co Inc, Wal-Mart Stores Inc and Toys R Us, its latest tactic to hold onto shoppers focused on price.


The move extends an online price-matching program that Target introduced over the holiday season and which was supposed to last only from November 1 to December 16. It also comes after Target last week reported flat sales growth in December at stores open at least a year.






In November Chief Executive Gregg Steinhafel said the retailer was not seeing a lot of price-match activity in its stores.


While shopping online has grown rapidly in recent years, it still represents a small fraction of overall shopping in the United States. Target’s policy of matching online prices differs from policies at several chains, which match only printed advertised prices for items sold at stores.


Target said that throughout the year it will match the price when a customer buys an eligible item at one of its stores and finds the same item at a lower price in the following week’s Target circular or in a local competitor’s printed ad. It will also match the price if the customer finds the same item at a lower price within a week on Target’s website or the websites of Amazon, Walmart, Best Buy and Toys R Us.


Amazon says it offers competitive prices and does not offer price matching when an item’s price drops after a customer buys it, with the exception of televisions. Walmart matches the prices of print ads from competitors. Walmart also says it checks the prices of 30,000 items at competing chains each week to make sure it has the lowest prices.


Best Buy matches the price from a local competitor’s store, a local Best Buy store or its own web site. Toys R Us matches in-store prices and certain online prices.


(Reporting By Jessica Wohl in Chicago and Phil Wahba in New York; Editing by Alden Bentley and John Wallace)


Internet News Headlines – Yahoo! News





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Kate Falls Under Vogue's Microscope









01/07/2013 at 12:45 PM EST







Duchess of Cambridge


Fame; Landov (2); WireImage


What's a little more scrutiny?

Arguably the most-watched fashion icon – certainly the most closely followed expectant mother – in the world, the Duchess of Cambridge has been placed under the microscope of U.K. Vogue for its February issue.

Before determining the key to her "feminine and traditional" style (at least, before her baby bump), the publication first categorizes Kate's look as "International Sleekness."

Just how close is the mag's inspection? Close enough to note exactly how often and the manner in which Kate, who turns 31 Jan. 9, holds her clutch bags: hands together, 48% of the time; one-handed, 31%.

As for when the Kate phenomenon actually started, the article's author, Lisa Armstrong, fashion editor of the Daily Telegraph, turns to Reiss's brand director, Andy Rogers. He pinpoints the moment to "when Kate wore that nude-pink Shola dress to meet the Obamas at Buckingham Palace in May 2011."

Comparing the two women's styles, Rogers says, "Michelle wore a beautiful blue silk dress and fuchsia jacket, very bold, and probably bang-on trend – but whoa, it clashed with the [gaudy] decor." As a result, "Kate," he insists, "dominates the picture."

She also helped put the fashion brand on the map. "In the past 18 months, thanks to the Kate Effect, Reiss's reputation has grown globally," Armstrong writes. "Before Kate, Reiss had eight stores in America. Now it has 14 more concessions, all in Bloomingdale's."

By Vogue's calculation, Kate also helped boost sales of hosiery at the British supermarket chain Asda by a staggering 500%.

Apparently, too, Kate is strictly hands-on when it comes to her appearance. "She's got someone who organizes appointments with designers," a fashion-industry fixer tells Vogue. "Obviously there are ladies-in-waiting who do the packing. But she had to work out her look herself."

Other vitals: the royal ringlets measure nearly one inch; she works out "all the time, apparently"; necklines are "usually curved"; she wears blue 24% of the time and cream or yellow only 5%; she positions her hats "to the right of the royal 'do at a 50-degree angle, thus emphasizing her cheekbones"; and she prefers three-quarter-length sleeves, the better to reveal her wrist bling and confirm the fact that her arms are not too thin.

So, what's ahead? "Diverting looks," writes Armstrong, "and a fair few raised waists that accommodate, rather than flaunt, the royal belly." But wait, there's more: "And even more luxuriant hair."

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Your medical chart could include exercise minutes


CHICAGO (AP) — Roll up a sleeve for the blood pressure cuff. Stick out a wrist for the pulse-taking. Lift your tongue for the thermometer. Report how many minutes you are active or getting exercise.


Wait, what?


If the last item isn't part of the usual drill at your doctor's office, a movement is afoot to change that. One recent national survey indicated only a third of Americans said their doctors asked about or prescribed physical activity.


Kaiser Permanente, one of the nation's largest nonprofit health insurance plans, made a big push a few years ago to get its southern California doctors to ask patients about exercise. Since then, Kaiser has expanded the program across California and to several other states. Now almost 9 million patients are asked at every visit, and some other medical systems are doing it, too.


Here's how it works: During any routine check of vital signs, a nurse or medical assistant asks how many days a week the patient exercises and for how long. The number of minutes per week is posted along with other vitals at the top the medical chart. So it's among the first things the doctor sees.


"All we ask our physicians to do is to make a comment on it, like, 'Hey, good job,' or 'I noticed today that your blood pressure is too high and you're not doing any exercise. There's a connection there. We really need to start you walking 30 minutes a day,'" said Dr. Robert Sallis, a Kaiser family doctor. He hatched the vital sign idea as part of a larger initiative by doctors groups.


He said Kaiser doctors generally prescribe exercise first, instead of medication, and for many patients who follow through that's often all it takes.


It's a challenge to make progress. A study looking at the first year of Kaiser's effort showed more than a third of patients said they never exercise.


Sallis said some patients may not be aware that research shows physical inactivity is riskier than high blood pressure, obesity and other health risks people know they should avoid. As recently as November a government-led study concluded that people who routinely exercise live longer than others, even if they're overweight.


Zendi Solano, who works for Kaiser as a research assistant in Pasadena, Calif., says she always knew exercise was a good thing. But until about a year ago, when her Kaiser doctor started routinely measuring it, she "really didn't take it seriously."


She was obese, and in a family of diabetics, had elevated blood sugar. She sometimes did push-ups and other strength training but not anything very sustained or strenuous.


Solano, 34, decided to take up running and after a couple of months she was doing three miles. Then she began training for a half marathon — and ran that 13-mile race in May in less than three hours. She formed a running club with co-workers and now runs several miles a week. She also started eating smaller portions and buying more fruits and vegetables.


She is still overweight but has lost 30 pounds and her blood sugar is normal.


Her doctor praised the improvement at her last physical in June and Solano says the routine exercise checks are "a great reminder."


Kaiser began the program about three years ago after 2008 government guidelines recommended at least 2 1/2 hours of moderately vigorous exercise each week. That includes brisk walking, cycling, lawn-mowing — anything that gets you breathing a little harder than normal for at least 10 minutes at a time.


A recently published study of nearly 2 million people in Kaiser's southern California network found that less than a third met physical activity guidelines during the program's first year ending in March 2011. That's worse than results from national studies. But promoters of the vital signs effort think Kaiser's numbers are more realistic because people are more likely to tell their own doctors the truth.


Dr. Elizabeth Joy of Salt Lake City has created a nearly identical program and she expects 300 physicians in her Intermountain Healthcare network to be involved early this year.


"There are some real opportunities there to kind of shift patients' expectations about the value of physical activity on health," Joy said.


NorthShore University HealthSystem in Chicago's northern suburbs plans to start an exercise vital sign program this month, eventually involving about 200 primary care doctors.


Dr. Carrie Jaworski, a NorthShore family and sports medicine specialist, already asks patients about exercise. She said some of her diabetic patients have been able to cut back on their medicines after getting active.


Dr. William Dietz, an obesity expert who retired last year from the Centers for Disease Control and Prevention, said measuring a patient's exercise regardless of method is essential, but that "naming it as a vital sign kind of elevates it."


Figuring out how to get people to be more active is the important next step, he said, and could have a big effect in reducing medical costs.


___


Online:


Exercise: http://1.usa.gov/b6AkMa


___


AP Medical Writer Lindsey Tanner can be reached at http://www.twitter.com/LindseyTanner


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Wall Street falls on banks' settlement, doubts on earnings

NEW YORK (Reuters) - Stocks fell on Monday as banks agreed to pay billions in a settlement with U.S. regulators and investors speculated that U.S. earnings for the end of 2012 would be only modestly better than in the previous quarter.


Financials declined after a group of home mortgage servicers, including major U.S. banks, agreed to pay a total of $8.5 billion to end a government-ordered, case-by-case review of foreclosures.


The KBW bank index <.bkx>, a gauge of U.S. bank stocks, was down 0.7 percent.


Earnings are expected to be only slightly better than the third-quarter's lackluster results, and analysts' current estimates are down sharply from what they were in October.


"There is little doubt that concerns about the fiscal cliff created spending hesitancy in both consumers and businesses in the fourth quarter, and it is likely that will adversely impact earnings season," said Randy Frederick, managing director of active trading and derivatives at Charles Schwab.


Aluminum company Alcoa Inc will unofficially launch the reporting season by announcing its results after Tuesday's market close.


The Dow Jones industrial average <.dji> was down 77.33 points, or 0.58 percent, at 13,357.88. The Standard & Poor's 500 Index <.spx> was down 8.69 points, or 0.59 percent, at 1,457.78. The Nasdaq Composite Index <.ixic> was down 12.39 points, or 0.40 percent, at 3,089.26.


The day's decline came a session after the S&P 500 finished at a five-year high and investors booked profits on stocks' best weekly gain in more than a year, boosted by a budget deal and economic data. The S&P 500 rose 4.6 percent last week.


Ten mortgage servicers - including Bank of America , Citigroup , JPMorgan , and Wells Fargo - agreed on Monday to pay $8.5 billion to end a case-by-case review of foreclosures required by U.S. regulators.


Bank of America also announced roughly $11.6 billion of settlements with mortgage finance company Fannie Mae and a $1.8 billion sale of collection rights on home loans.


The bank also entered into agreements with Nationstar Mortgage Holdings and Walter Investment Management to sell about $306 billion of residential mortgage servicing rights.


Bank of America shares were down 0.6 percent at $12.04 while Nationstar Mortgage Holdings jumped 11.3 percent to $36.97.


JPMorgan shares were down 0.4 percent at $45.16 and Citigroup shares were down 0.8 percent to $42.07. Wells Fargo shares fell 1.1 percent to $34.55.


Walt Disney Co started an internal cost cutting review several weeks ago that may include layoffs at its studio and other units, three people with knowledge of the effort told Reuters. Disney shares fell 2.4 percent to $50.95.


Video-streaming service Netflix Inc shares gained 5.8 percent to $101.55 after it said it will carry previous seasons of some popular shows produced by Time Warner's Warner Bros Television.


Amazon.com shares hit their highest price ever at $269.22 after Morgan Stanley raised its rating on the stock. Shares were up 3.3 percent at $267.77.


Major U.S. technology companies could miss estimates for fourth-quarter earnings as budget worries likely led some corporate clients to tighten their belts last month.


(Reporting By Angela Moon; Editing by Kenneth Barry)



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Bill Richardson and Eric Schmidt of Google Visit North Korea


David Guttenfelder/Associated Press


Eric Schmidt, Google's executive chairman, arrived in Pyongyang on Monday.







SEOUL, South Korea — Bill Richardson, the former governor of New Mexico, led a private delegation including Eric Schmidt, Google’s executive chairman, to North Korea on Monday, a controversial trip to a country that is among the most hostile to the Internet.








Kim Kwang Hyon/Associated Press

Bill Richardson led a private delegation to North Korea on Monday.






Mr. Richardson, who has visited North Korea several times, called his four-day trip a private humanitarian mission and said he would try to meet with Kenneth Bae, a 44-year-old South Korea-born American citizen who was arrested on charges of “hostile acts” against North Korea after entering the country as a tourist in early November.


“I heard from his son who lives in Washington State, who asked me to bring him back,” Mr. Richardson said in Beijing before boarding a plane bound for Pyongyang. “I doubt we can do it on this trip.”


In a one-sentence dispatch, the North’s state-run Korean Central News Agency confirmed the American group’s arrival in Pyongyang, calling it “a Google delegation.”


Mr. Richardson said his delegation planned to meet with North Korean political, economic and military leaders and visit universities.


Mr. Schmidt and Google have kept quiet about why Mr. Schmidt joined the trip, which the State Department advised against, calling the visit unhelpful. Mr. Richardson said Monday that Mr. Schmidt was “interested in some of the economic issues there, the social media aspect,” but did not elaborate. Mr. Schmidt is a staunch proponent of Internet connectivity and openness.


Except for a tiny portion of its elite, North Korea’s population is blocked from the Internet. Under its new leader, Kim Jong-un, the country has emphasized science and technology but has also vowed to intensify its war against the infiltration of outside information in the isolated country, which it sees as a potential threat to its totalitarian grip on power.


Although it is engaged in a standoff with the United States over its nuclear weapons and missile programs and habitually criticizes American foreign policy as “imperial,” North Korea welcomes high-profile American visits to Pyongyang, billing them as signs of respect for its leadership. It runs a special museum for gifts that foreign dignitaries have brought for its leaders.


Washington has never established diplomatic ties with North Korea, and the two countries remain technically at war after the 1950-53 Korean War ended in a truce.


But Mr. Richardson’s trip comes at a particularly delicate time for Washington. In the past weeks, it has been trying to muster international support to penalize North Korea for its launching last month of a long-range rocket, which the United States condemned as a violation of United Nations Security Council resolutions banning the country from testing intercontinental ballistic missile technology.


North Korea has often required visits by high-profile Americans, including former Presidents Jimmy Carter and Bill Clinton, before releasing American citizens held there on criminal charges. Mr. Richardson, who is also a former ambassador to the United Nations, traveled to Pyongyang in 1996 to negotiate the release of Evan Hunziker, who was held for three months on charges of spying after swimming across the river border between China and North Korea.


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Kuwait sentences second man to jail for insulting emir: lawyer






DUBAI (Reuters) – A Kuwaiti court sentenced a man to two years in prison on Monday for insulting the country’s ruler on Twitter, his lawyer said, the second to be jailed for the offence in as many days.


The U.S.-allied Gulf Arab state has clamped down in recent months on political activists who have been using social media websites to criticize the government and the ruling family.






Kuwait has seen a series of protests, including one on Sunday night, organized by the opposition since the ruling emir, Sheikh Sabah al-Ahmad al-Sabah, used emergency powers in October to change the voting system.


The court sentenced Ayyad al-Harbi, who has more than 13,000 followers on Twitter, to the prison term two months after his arrest and release on bail.


Harbi used his Twitter account to criticize the Kuwait government and the emir. He tweeted on Sunday: “Tomorrow morning is my trial’s verdict on charges of slander against the emir, spreading of false news.”


His lawyer, Mohammed al-Humidi, said Harbi would appeal against the verdict. “We’ve been taken by surprise because Kuwait has always been known internationally and in the Arab world as a democracy-loving country,” Humidi told Reuters by telephone. “People are used to democracy, but suddenly we see the constitution being undermined.”


On Sunday, Rashid Saleh al-Anzi was given two years in prison over a tweet that “stabbed the rights and powers of the emir”, according to the online newspaper Alaan. Anzi, who has 5,700 Twitter followers, was expected to appeal.


Kuwait, a U.S. ally and major oil producer, has been taking a firmer line on politically sensitive comments aired on the Internet.


In June 2012, a man was sentenced to 10 years in prison after he was convicted of endangering state security by insulting the Prophet Mohammad and the Sunni Muslim rulers of Saudi Arabia and Bahrain on social media.


Two months later, authorities detained Sheikh Meshaal al-Malik Al-Sabah, a member of the ruling family, over remarks on Twitter in which he accused authorities of corruption and called for political reform, a rights activist said.


Public demonstrations about local issues are common in a state that allows the most dissent in the Gulf, and Kuwait has avoided Arab Spring-style mass unrest that has ousted four veteran Arab dictators in the past two years.


But tensions have risen between Kuwait’s hand-picked government, in which ruling family members hold the top posts, and the elected parliament and opposition groups.


(Reporting by Mahmoud Habboush; Editing by Mark Heinrich)


Internet News Headlines – Yahoo! News





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Courteney Cox: Ex David Arquette Is Still My 'Best Friend in the World'















01/06/2013 at 12:00 PM EST







Courteney Cox and Ellen DeGeneres


Michael Rozman/Warner Bros.


The romance didn't work out for Courteney Cox and David Arquette, but the Cougar Town star still has plenty of love for her ex – as a friend.

"He's my best friend in the world," the actress says on an episode of The Ellen DeGeneres Show airing Monday. "I love him."

Months since the former couple both filed divorce papers citing irreconcilable differences in June, Cox says, "I appreciate David more now than I ever did. I mean ... it's hard. I don't recommend divorce in general, but, you know, he is my best friend and we've both grown and changed."

After all, the split seemed amicable for Cox, 48, and Arquette, 41, who initially separated in 2010, as they sought joint legal and physical custody of their 8-year-old daughter Coco in their filings.

"I think we both appreciate each other more," she adds. "I hope he does. I do."

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Your medical chart could include exercise minutes


CHICAGO (AP) — Roll up a sleeve for the blood pressure cuff. Stick out a wrist for the pulse-taking. Lift your tongue for the thermometer. Report how many minutes you are active or getting exercise.


Wait, what?


If the last item isn't part of the usual drill at your doctor's office, a movement is afoot to change that. One recent national survey indicated only a third of Americans said their doctors asked about or prescribed physical activity.


Kaiser Permanente, one of the nation's largest nonprofit health insurance plans, made a big push a few years ago to get its southern California doctors to ask patients about exercise. Since then, Kaiser has expanded the program across California and to several other states. Now almost 9 million patients are asked at every visit, and some other medical systems are doing it, too.


Here's how it works: During any routine check of vital signs, a nurse or medical assistant asks how many days a week the patient exercises and for how long. The number of minutes per week is posted along with other vitals at the top the medical chart. So it's among the first things the doctor sees.


"All we ask our physicians to do is to make a comment on it, like, 'Hey, good job,' or 'I noticed today that your blood pressure is too high and you're not doing any exercise. There's a connection there. We really need to start you walking 30 minutes a day,'" said Dr. Robert Sallis, a Kaiser family doctor. He hatched the vital sign idea as part of a larger initiative by doctors groups.


He said Kaiser doctors generally prescribe exercise first, instead of medication, and for many patients who follow through that's often all it takes.


It's a challenge to make progress. A study looking at the first year of Kaiser's effort showed more than a third of patients said they never exercise.


Sallis said some patients may not be aware that research shows physical inactivity is riskier than high blood pressure, obesity and other health risks people know they should avoid. As recently as November a government-led study concluded that people who routinely exercise live longer than others, even if they're overweight.


Zendi Solano, who works for Kaiser as a research assistant in Pasadena, Calif., says she always knew exercise was a good thing. But until about a year ago, when her Kaiser doctor started routinely measuring it, she "really didn't take it seriously."


She was obese, and in a family of diabetics, had elevated blood sugar. She sometimes did push-ups and other strength training but not anything very sustained or strenuous.


Solano, 34, decided to take up running and after a couple of months she was doing three miles. Then she began training for a half marathon — and ran that 13-mile race in May in less than three hours. She formed a running club with co-workers and now runs several miles a week. She also started eating smaller portions and buying more fruits and vegetables.


She is still overweight but has lost 30 pounds and her blood sugar is normal.


Her doctor praised the improvement at her last physical in June and Solano says the routine exercise checks are "a great reminder."


Kaiser began the program about three years ago after 2008 government guidelines recommended at least 2 1/2 hours of moderately vigorous exercise each week. That includes brisk walking, cycling, lawn-mowing — anything that gets you breathing a little harder than normal for at least 10 minutes at a time.


A recently published study of nearly 2 million people in Kaiser's southern California network found that less than a third met physical activity guidelines during the program's first year ending in March 2011. That's worse than results from national studies. But promoters of the vital signs effort think Kaiser's numbers are more realistic because people are more likely to tell their own doctors the truth.


Dr. Elizabeth Joy of Salt Lake City has created a nearly identical program and she expects 300 physicians in her Intermountain Healthcare network to be involved early this year.


"There are some real opportunities there to kind of shift patients' expectations about the value of physical activity on health," Joy said.


NorthShore University HealthSystem in Chicago's northern suburbs plans to start an exercise vital sign program this month, eventually involving about 200 primary care doctors.


Dr. Carrie Jaworski, a NorthShore family and sports medicine specialist, already asks patients about exercise. She said some of her diabetic patients have been able to cut back on their medicines after getting active.


Dr. William Dietz, an obesity expert who retired last year from the Centers for Disease Control and Prevention, said measuring a patient's exercise regardless of method is essential, but that "naming it as a vital sign kind of elevates it."


Figuring out how to get people to be more active is the important next step, he said, and could have a big effect in reducing medical costs.


___


Online:


Exercise: http://1.usa.gov/b6AkMa


___


AP Medical Writer Lindsey Tanner can be reached at http://www.twitter.com/LindseyTanner


Read More..

"Cliff" concerns give way to earnings focus

NEW YORK (Reuters) - Investors' "fiscal cliff" worries are likely to give way to more fundamental concerns, like earnings, as fourth-quarter reports get under way next week.


Financial results, which begin after the market closes on Tuesday with aluminum company Alcoa , are expected to be only slightly better than the third-quarter's lackluster results. As a warning sign, analyst current estimates are down sharply from what they were in October.


That could set stocks up for more volatility following a week of sharp gains that put the Standard & Poor's 500 index <.spx> on Friday at the highest close since December 31, 2007. The index also registered its biggest weekly percentage gain in more than a year.


Based on a Reuters analysis, Europe ranks among the chief concerns cited by companies that warned on fourth-quarter results. Uncertainty about the region and its weak economic outlook were cited by more than half of the 25 largest S&P 500 companies that issued warnings.


In the most recent earnings conference calls, macroeconomic worries were cited by 10 companies while the U.S. "fiscal cliff" was cited by at least nine as reasons for their earnings warnings.


"The number of things that could go wrong isn't so high, but the magnitude of how wrong they could go is what's worrisome," said Kurt Winters, senior portfolio manager for Whitebox Mutual Funds in Minneapolis.


Negative-to-positive guidance by S&P 500 companies for the fourth quarter was 3.6 to 1, the second worst since the third quarter of 2001, according to Thomson Reuters data.


U.S. lawmakers narrowly averted the "fiscal cliff" by coming to a last-minute agreement on a bill to avoid steep tax hikes this weeks -- driving the rally in stocks -- but the battle over further spending cuts is expected to resume in two months.


Investors also have seen a revival of worries about Europe's sovereign debt problems, with Moody's in November downgrading France's credit rating and debt crises looming for Spain and other countries.


"You have a recession in Europe as a base case. Europe is still the biggest trading partner with a lot of U.S. companies, and it's still a big chunk of global capital spending," said Adam Parker, chief U.S. equity strategist at Morgan Stanley in New York.


Among companies citing worries about Europe was eBay , whose chief financial officer, Bob Swan, spoke of "macro pressures from Europe" in the company's October earnings conference call.


REVENUE WORRIES


One of the biggest worries voiced about earnings has been whether companies will be able to continue to boost profit growth despite relatively weak revenue growth.


S&P 500 revenue fell 0.8 percent in the third quarter for the first decline since the third quarter of 2009, Thomson Reuters data showed. Earnings growth for the quarter was a paltry 0.1 percent after briefly dipping into negative territory.


On top of that, just 40 percent of S&P 500 companies beat revenue expectations in the third quarter, while 64.2 percent beat earnings estimates, the Thomson Reuters data showed.


For the fourth quarter, estimates are slightly better but are well off estimates for the quarter from just a few months earlier. S&P 500 earnings are expected to have risen 2.8 percent while revenue is expected to have gone up 1.9 percent.


Back in October, earnings growth for the fourth quarter was forecast up 9.9 percent.


In spite of the cautious outlooks, some analysts still see a good chance for earnings beats this reporting period.


"The thinking is you need top line growth for earnings to continue to expand, and we've seen the market defy that," said Mike Jackson, founder of Denver-based investment firm T3 Equity Labs.


Based on his analysis, energy, industrials and consumer discretionary are the S&P sectors most likely to beat earnings expectations in the upcoming season, while consumer staples, materials and utilities are the least likely to beat, Jackson said.


Sounding a positive note on Friday, drugmaker Eli Lilly and Co said it expects profit in 2013 to increase by more than Wall Street had been forecasting, primarily due to cost controls and improved productivity.


(Reporting By Caroline Valetkevitch; Editing by Kenneth Barry)



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