The unofficial start of corporate earnings season kicked off Monday, with Alcoa (AA) announcing how it did during the start of the year. The world's largest aluminum maker reported better than expected earnings as demand from U.S. automakers increased, but revenue fell short of expectations.
Alcoa isn't going to be the only company to report mediocre earnings for the quarter. Across Standard & Poor 500 companies, the gap between stock prices and earnings is expected to widen, analysts say. U.S. stocks started the year reaching record highs, but earnings growth also likely slowed. This is unusual, since stock prices typically rise and fall in tandem with earnings.
While investors are betting companies will do better later this year, earnings growth for the first three months of 2013 is expected to fall 0.6%, according to a report released by Factset last week. If that happens, it will mark the second year-over-year decline in just four years (the last dropped happened in the third quarter of 2011).
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