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Earnings Season: Bright Outlook for Some Sectors

Althea Chang
Big Data Download

This earnings season could be full of upside surprises, judging from earnings and revenue trends in recent quarters.

Over the last four quarters, companies have been conservative with their guidance and analysts have been conservative with their estimates, said Rich Peterson, director of S&P Capital IQ Global Markets Intelligence. As a result, more companies in previous quarters have reported earnings and revenue that exceeded expectations.For the past four quarters, 65.3 percent of companies have beaten earnings expectations, based on analyses of the components of the S&P 500. Historically, about 62 percent of companies beat expectations. While that may seem like a small uptick, it's still a significant indicator of what to expect this quarter, Peterson told "Big Data Download."

"This time around we're coming off the fiscal cliff," Peterson noted. That could mean that estimates could continue to be conservative, he said.

The telecom and consumer discretionary sectors are expected to lead earnings growth, while energy and industrial stocks are expected to weigh Down the S&P. Among the consumer discretionary stocks reporting next week are Bed Bath & Beyond (BBBY) and Ruby Tuesday (RT).

With overall sector trends in mind , Vanguard Telecom Services ETF (VOX) and Consumer Discretionary Select Sector SPDR (XLY) are expected to see an upward trend, while Energy Select Sector SPDR (XLE) , Industrial Select Sector SPDR (XLI) are expected to take a hit.