NEW YORK, April 12: Wall Street faces a gut check in the coming week as an avalanche of earnings reports will show how well corporate America is holding up in the face of economic turmoil.

So far the news from the earnings front has been grim with a sharply disappointing report from General Electric, which is often seen as a microcosm of the economy, and lackluster results from aluminum maker Alcoa.

The big question for investors is whether the market has priced the impact of housing and financial market turmoil into stock prices and earnings, or whether more surprises are in the offing, say analysts.

In the week to Friday, the Dow Jones Industrial Average lost 2.25pc to 12,325.42 while the Standard & Poor’s 500 broad-market index shed 2.74pc to 1,332.83.

The tech-dominated Nasdaq composite slid 3.4 per cent to 2,290.24.

The past week’s market action was marked by a disappointing report on the US trade balance, a sharply weaker consumer sentiment survey as well as the earnings news.

Additionally, the Federal Reserve released minutes effectively acknowledging a contraction in the US economy that would mean as recession is at hand.

Barry Ritholtz at Ritholtz Research & Analytics said the surprisingly weak profits and lower outlook from GE shows the stock market has been too complacent.

Miles Zyblock, an analyst at RBC Capital Markets, said the outlook for corporate profits is too optimistic for our comfort with a consensus forecast of 14.4 per cent earnings growth for the S&P 500 this year.

Such lofty expectations add to the risk of earnings disappointment.Gregory Drahuschak at Janney Montgomery Scott said it is important to keep a longer view in mind.—AFP