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Market's Next Big Worry: A Dismal Earnings Season Ahead
CNBC.com | March 19, 2012 | 02:05 PM EDT

An ominous cloud is about to hover over the stock market's feel-good 2012 story: Earnings season, which begins in just a few weeks, is shaping up to be the worst since the financial crisis.

Projections for first-quarter earnings growth are running as low as 0.5 percent, according to Standard & Poor's/Capital IQ. And that's coming off a mediocre fourth quarter from 2011, indicating that the days of big earnings improvements that followed the depths of the 2008 financial crisis are over.

"If there's a concern, it's earnings," says Jim Paulsen, chief market strategist at Wells Capital Management in Minneapolis. "Earnings are going to be far slower than they've been. There's almost no way by the laws of physical science that they can't be."

What that will mean to the stock market and its bull run that began in October is unclear.

After all, stocks have powered higher before without the benefit of strong earnings to back them up, and those betting on the market to keep roaring here are hoping the same thing happens this time.

But after a surge that has taken the S&P 500 up 28 percent in five months, a psychological nudge could be all the market needs to lose some shine.

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