Is Alcoa the Earnings Season Bellwether?

By now, anyone with even a modest interest in stocks knows that Alcoa (AA) holds the unofficial honor of kicking-off earnings season thanks only to its inexplicable inclusion amongst the thirty blue-chip stocks that make up the Dow Jones Industrial Average (^DJI).

And while the aluminum producer was able to "beat" analyst expectations by a penny (that had been previously lowered by 60%) it seems to have had little impact on the stock itself, which is now extending its lead as the Year's Biggest Loser in the Dow.

"In terms of how the rest of the companies will perform versus estimates, Alcoa really doesn't have much predictive value," says John Butters, senior earnings analyst at Factset in the attached video. "Whether Alcoa beats or misses, we tend to see the same percentage of companies in the S&P 500 beating estimates over the quarter."

But, he says, when it comes to price performance, Alcoa's results start to matter more to the broader market.

"When Alcoa beats, the market has been up 80% of the time over the past ten years. However, when Alcoa misses, it's only about a 50-50 proposition," he says.

And while Alcoa's turn in the spotlight is over, investors have already moved on to bigger things, and are now keying into Friday morning's double-whammy when JPMorgan Chase (JPM) and Wells Fargo (WFC) both report their quarterly results.