The S&P 500 has risen about 7.1 percent during the third year of a bull market and the price-earnings ratio increases 6.3 percent, according to Bloomberg data dating back to 1960. The index is trading at 13.5 times reported earnings, compared with 15.8 in February and about 18 percent below the 16.4 average since 1954, data compiled by Bloomberg show.
Alcoa Inc. was the first Dow company to report earnings for the last three months of 2011 yesterday when the largest U.S. aluminum producer posted its first quarterly loss in more than two years. Fastenal Co. and eBay Inc. are among the companies scheduled to report in the next 10 days that analysts forecast will see an increase in earnings, according to estimates compiled by Bloomberg.
"What we can see is that companies are still in business, balance sheets are good, earnings are still there and the negative case continues to be somewhat sketchy," Birinyi said. "The potential for surprise does exist."