The week ahead is pleasantly free of major economic announcements, giving investors time to study data that really matters: earnings reports from dozens of companies.

Among those expected to reveal their quarterly profits and losses this week are Bank One Corp., Microsoft Corp., Amazon.com Inc., SBC Communications Inc., Nuveen Investments Inc. and Boise Cascade Corp.

Will the news be good? And if it is, will stock prices go up?

“Typically at this point in the business cycle, profits tend to surprise on the upside,” said William T. Wilson, the Chicago-based senior economist for Ernst & Young.

Wilson said corporate earnings are glowing from an increase in worker productivity, with little increase in worker wages. Recent tax breaks help too, he said, as do low interest rates.

He said those factors will likely push the stock market higher in the short term.

“Financial conditions have been the most favorable for (stocks) in at least 30 years,” Wilson said.

Wilson is not alone in his optimism.

“We are in a (market) uptrend that will probably go on for the rest of the year,” said Al Kugel, chief investment strategist for Stein Roe Investment Counsel LLC. “I don’t see anything next week that is going to interfere with it.”

Kugel said institutional and individual investors are underweighted in stocks. Those with cash on hand will find themselves drawn into the market, adding more support to stock prices.

“Earnings reports will be the only news in town, and I think they will be good,” he said.

There are a few economic reports to be released during the week.

The Conference Board will release its index of leading indicators – data that shows where the economy is headed – on Monday.

But its summary of jobless claims, stock prices, building permits and other indicators are largely culled from previous announcements.

On Thursday the Labor Department is set to report the number of people who filed initial claims for state unemployment benefits during the previous week.

The data can be significant, showing whether job losses are increasing or declining. But because it is a weekly snapshot, its numbers are highly volatile. Many economists prefer to study four weeks of data before reaching conclusions.

Some economists think the job picture, while not dire, is not getting much better.

“We are still far from seeing robust gains in monthly nonfarm payrolls that would be needed to create enough jobs to soak up the excess capacity in the labor market and lead the unemployment rate lower,” said David Rosenberg, Merrill Lynch’s chief North American economist, in a report to investors.

Nor does the trend show any sign of reversing. The Economic Policy Institute noted that in September the United States offered 129.9 million payroll jobs. In March 2001, the figure was 132.5 million.

For avid followers of the retail industry, the week does offer a couple of reports. The UBS Warburg-Bank of Mitsubishi and LJR Redbook Research will release their sales summaries for the previous week Tuesday morning.

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(c) 2003, Chicago Tribune.

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AP-NY-10-17-03 1811EDT