The major indexes are on track for a modestly positive open at the start of May’s trading session, with market participants looking ahead to a busy docket of economic and earnings reports.

The focus this week is on economic data, starting with the factory sector ISM survey today, which is expected to pull back a bit from last month’s 51.8 level. Last month’s reading had shown the first positive momentum since the summer months last year, with new orders and exports particularly showing.

A stronger reading today will strengthen expectations of a notable turnaround in the U.S. economy’s growth trajectory in the current period following Q1’s anemic showing. The recent weakening in the U.S. dollar has raised hopes that the worst may finally be behind us, particularly for the export-centric manufacturers.

Jobs will be the other key point of focus this week, with the April non-farm payroll reading coming out on Friday. The expectation is for ‘headline’ gains of 200K vs. 215K in March and the unemployment rate ticking back down to 4.9%. Unlike other economic readings which weakened during Q1, the labor market continued to chug along month after month without losing steam. Positive economic readings this week, both from the factory sector as well as the labor market, will increase the odds of a June Fed hike.   

This is the last busy week of the Q1 earnings season, with results from more than 130 S&P 500 companies on the docket. By the end of this week, we will have seen results from 88% of S&P 500 members. The trends for most of the sectors (Retail still has a sizable number of reports pending) are already well established. These include widespread growth challenges, more numerous positive surprises, and relative fewer negative revisions to current-period estimates. These trends will likely carry through to the end of this reporting cycle without any major changes.

Including all of this morning’s reports from the likes of drilling contractors Diamond Offshore (DO - Analyst Report), Helmerich & Payne (HP - Analyst Report) and others, we now have Q1 results from 316 S&P 500 members that combined account for 73.3% of the index’s total market capitalization. Total earnings for these companies are down -7.3% on -2.4% lower revenues, with 71.8% beating EPS estimates and 57.6% coming ahead of top-line estimates.

As we have been stating from this reporting season all along, the growth pace is notably tracking below other recent periods, but positive surprises are tracking above other recent periods. The most plausible explanation for the bigger proportion of positive surprises is the low levels to which estimates had fallen ahead of the start of this earnings season. The recent pullback in the U.S. dollar’s exchange value has helped Q1 results on the margin as well.  

For Q1 as a whole, combining the actual results that have come out already with estimates for the still-to-come reports, total earnings are on track to be down -7.4% from the same period last year on -1% lower revenues, the 4th quarter in a row of earnings declines for the index. Earnings declines are expected to continue in the current period (2016 Q2) as well, with estimates for the period still coming down. Total earnings for the S&P 500 index are now expected to be down -5.6% from the same period last year on -1.2% lower revenues.