By Nick Godt

The inauguration of President-elect Barack Obama might be the only boost for Wall Street next week, as a deluge of what are expected to be mostly bad corporate results and fresh reports on the state of the housing market starts pouring in.

"The stock market is a forward-looking animal that tends to move about five months ahead of the real economy, but right now its actions don't bode well for a recovery until late in the year at best," said Robert Kavcic, market strategist at BMO Capital Markets.

With U.S. markets closed Monday for the Martin Luther King holiday, the trading week will kick off Tuesday. No economic reports are due that day, but there will be a slew of financial results, including those from IBM (IBM) and Johnson & Johnson (JNJ), two blue-chip stocks, and from regional banks, Regions Financial (RF), State Street (STT) and U.S. Bancorp (USB).

Financial firms were already front and center in the market over the past week, as the likes of JP Morgan Chase (JPM), Bank of America (BAC), and Citigroup (C), all posted worse-than-expected results, with the economic recession further darkening the outlook for the already-embattled sector.

"Earnings are terrible and outlooks are cloudy," said Jack Ablin, chief investment officer at Harris Trust. "For financials, there are more worries ahead in my view."

For the week, the Dow Jones Industrial Average (DJI) slumped 3.7%, the broad S&P 500 (SPX) fell 4.7%, and the tech-heavy Nasdaq Composite (RIXF) lost 2.7%.

But stocks still rose Friday, for the second consecutive session of gains, with the Dow ending the session up 68 points at 8,281, the S&P 500 rising 6 points to 850 and the Nasdaq gaining 17 points to 1,529.

The government late Thursday approved a deal to provide an additional $20 billion in capitalization for Bank of America and to guarantee up to $400 billion in losses on real estate loans at both the Charlotte, N.C. lender and at Citigroup. Separately, Citigroup said it would split its operations in two.

End of the rebound?

Although the stock market seemed poised to continue its late-year bounce into January, many market strategists are now trimming their expectations in the face of much worse-than-expected economic data, including dismal job losses in December, and the few earnings reports that have come out so far.

Earnings at S&P 500 companies are now expected to have tumbled 20.2% in the fourth quarter of last year from the year-ago period, according to Thomson Financial. Just a week ago, expectations were for earnings to fall 15.1%.

The ratio of negative to positive pre-announcements has jumped to 3.6 to 1, its highest level since 2001, during the last recession.

"And one of the themes for the fourth quarter is that earnings weakness is spreading," said John Butters, earnings analyst at Thomson. "During the early stages, most of the weakness came from financials but now, seven out of the 10 sectors of the S&P 500 are expected to post negative growth."

Firms in traditionally defensive sectors, such as health care, consumer staples, and utilities are the only ones expected to have posted any profit gains during the fourth quarter.

Next week, 55 companies from the S&P 500 will report, with a lot of financial firms' results due out, along with a number of big names from the tech sector.

Besides IBM on Tuesday, Apple Inc. (AAPL) and eBay Inc. (EBAY) will report on Wednesday, followed by Google Inc. (GOOG) and Microsoft Corp. (MSFT) on Thursday.

Other blue-chip stocks due to report are United Technologies (UTX) on Tuesday, and General Electric Co. (GE) on Friday.

Housing

The housing market, whose demise revealed the bad home loans that led to the credit crisis and pushed the economy into recession, will dominate the news on the economic data front next week.

Wednesday will bring data on mortgage applications from the Mortgage Bankers Association, and the January housing market index from the National Association of Home Builders.

On Thursday, December housing starts and building permits, which are forward-looking indicators, will be released. Also on that day, investors will continue to monitor a dismal labor market with the release of weekly jobless claims numbers.

The Obama factor

The inauguration of President-elect Obama on Tuesday could still provide a needed boost for the market, according to Owen Fitzpatrick, market strategist at Deutsche Bank.

"The luster around Obama is quite big," he said. "It's like a light switch: out with the old, in with the new."

Political momentum for the president elect's economic stimulus plan, now estimated at around $850 billion, might also accelerate.

"It's now on the horizon," Fitzpatrick said. "The size of the package is large and it should lessen the impact of the recession."

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