Alcoa (NYSE:AA) announced poor earnings and its stock fell more than 11% ending the session on January 12th at $15.52. Some superstitious traders believe that because Alcoa is the first large American company to release earnings each quarter that it is a harbinger of what other corporate reports will show. That is as ridiculous as the belief that if the first man in the St Patrick’s Day Parade is 6’11’’ tall that the rest of the marchers will be taller than the average person.

Alcoa’s bad numbers were joined by news of distress from several other prominent companies. The trouble was not that firms are posting worrisome news early in the season which includes the last quarter of the year for most companies. What was a surprise was that the breadth of industries from which the warning came was so broad.

Chevron (NYSE:CVX), one of the world’s largest oil companies and the 10th largest American firm by market capitalization, said that its margins on refining would be low enough to hurt earnings in the fourth quarter. The difference between the price of oil and the price of oil by-product was unfavorable in the last quarter. The figures mean that Exxon (NYSE:XOM) and Conoco (NYSE:COP) will also have number trouble.

Aetna (NYSE:AET), one of the largest US insurance companies, said it would disappoint investors. Operating earnings for 2010 will be lower than last year, the firm forecast.

Amgen (NASDAQ:AMGN), the mammoth biotech firm, reported that its earnings for the year 2009 would be lower than expected. Analysts believe that nervous investors are also less likely to own the stock because Amgen’s experimental osteoporosis drug denosumab has not received final regulatory approval.

It is pointless to list all the companies that have said they will not do as well as expected. Food chain Supervalu (NYSE:SVU) said its last quarter was strong at about the same time as Aetna dropped its bad news. Every company that voices bad news may be matched by one that says its numbers for the fourth quarter of last year were good and will get better this year.

But, the stock market expects more than one piece of good news to offset one that is bad. This year is supposed to be the year of the unbelievable recovery. Corporate earnings are supposed to soar, even if unemployment keeps rising, which still seems an impossible combination to people who are not economists.

Citigroup’s chief equities strategist , Tobias Levkovich ,told CNBC last month that earnings for the S&P 500 would be up 16% in 2010. The figure is high enough so that there is plenty of room for Wall St. to be disappointed even if companies only improve profits by 10%, which in any normal year would be phenomenal.

Phenomenal may not be enough this year, and if it is not, 2010 will be brutal for investors.

Douglas A. McIntyre

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