Bank of America Corp (BAC), Verizon Communications Inc. (VZ): What to Expect This Earnings Season

Meanwhile, for telecoms, strong demand for smartphones, and steps to try to contain costs, are helping earnings prospects. Both AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) have taken steps to align the upgrade cycle with the 24-month contractual commitments that smartphone-buyers take on, alleviating part of the subsidy penalties that the companies suffer in offering upfront discounts when customers get new phones. In the long run, both companies might need to look abroad for further gains, but for now, they’re making the most of what they have.

By contrast, utilities and materials stocks are poised to show declines. For materials, that comes as no surprise, given the slowdown in demand for commodities, and the corresponding plunge in commodities prices for many major markets, especially gold and silver. Meanwhile, utilities have had to deal with rising natural-gas prices that have increased costs just as they’ve made big investments in shifting to gas-fired power plants. Moreover, the prospects for rising interest rates are forcing utilities to consider increased financing costs over the long run, and the latest climate-change policies from the Obama administration are raising plenty of question marks among utility investors as they consider how much money it will cost to comply with whatever new regulations eventually come from the policy. Even Exelon Corporation (NYSE:EXC), whose nuclear plants arguably protect it somewhat from criticism over fossil-fuel power production, has traded near multiyear lows, as investors question its ability to keep earnings growing.

Keep your eyes open
As earnings season begins next week, you’ll want to watch closely to see how early reports compare with expectations. Anything other than the usual share of positive surprises could make investors even more nervous than they are now, but strong reports could push the Dow Jones Industrial Average 2 Minute (INDEXDJX:.DJI) up on a new leg higher.

The article What to Expect This Earnings Season originally appeared on Fool.com is written by Dan Caplinger.

Fool contributor Dan Caplinger owns warrants on Bank of America. The Motley Fool recommends Bank of America and Exelon. The Motley Fool owns shares of Bank of America.

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