Results and outlooks from JPMorgan, Caterpillar, IBM, Johnson & Johnson, and Exxon Mobil will set the tone for corporate profits in the coming months

By Ben Steverman

A torrent of earnings news begins hitting investors this week, giving them key information about what was perhaps the toughest quarter for U.S. companies in a generation.

According to Thomson Reuters (TRI ), analysts expect earnings for companies in the S&P 500-stock index to fall 15.1% in the fourth quarter of 2008 from the previous year.

But there are plenty of questions about those forecasts, especially during such a rocky economic environment. Investors won’t really know how U.S. businesses are holding up until earnings results arrive in the next few weeks. They will want to scrutinize detailed quarterly results and hear executives talk about their 2009 forecasts.

Alcoa (AA ) officially kicked off earnings season Jan. 12 with its results, and they weren’t pretty. Here are five companies to watch in the coming weeks:

1. JPMorgan Chase (JPM )

JPMorgan surprised investors Jan. 13 by saying its fourth-quarter results would be released six days early, on Jan. 15. It’s hard to interpret that move, but the bank’s stock moved up by 6.7% on Jan. 13.

JPMorgan’s report could be an important clue to the future of the sector that started the economic crisis. Standard & Poor’s Chief Investment Strategist Sam Stovall calls financial stocks the earnings season’s “biggest wild card.”

Few investors expect good news from financial companies like JPMorgan. “The only question with financials is how badly they do,” says William Rutherford, president of Rutherford Investment Management.

“Problems with financials are continuing to plague the whole earnings front,” says James King, president and chief investment officer at National Penn Investors Trust Co.. He says JPMorgan is still experiencing “indigestion” from acquisitions it made in 2008, and sees “no huge turnaround coming” for the sector.

Still, many investors have spent more than a year avoiding all financial stocks. Could long-term value investors start buying them again after a better-than-expected report from JPMorgan, rival Bank of America (BAC ), or others? In that case, Rutherford says it’s possible he would start buying selected financial stocks.

John Merrill of Tanglewood Wealth Management rejects the idea. Financial stocks have serious short-term problems, given the troubled assets on their balance sheets, he says. But longer term, the problems are also serious, he warns, with the death or decline of key business areas like securitization and lending to private equity and commercial real estate. Financial companies like JPMorgan must spend “at least a half-decade figuring out who they are and how they’re going to make money,” Merrill says.

2. Caterpillar (CAT )

Closely linked to the build-out of infrastructure around the world, Caterpillar was pummeled by the global slowdown in late 2008. More recently, however, infrastructure stocks have risen on hopes that world governments, including the U.S. and China, will spend hundreds of billions of dollars on roads, bridges, and other projects in an effort to stimulate the economy. Caterpillar shares are up almost 25% since the market lows of late November.

Michael Yoshikami, president and chief investment strategist at YCMNET Advisors, believes infrastructure spending will rise due to government stimulus plans. However, he adds, “People are getting way ahead of what this means for stock prices.” The rally could fizzle based on very weak results from late 2008, he says.

The earnings reports and outlooks from infrastructure companies will be a key test of whether they can maintain their momentum. Caterpillar reports earnings on Jan. 26.

3. IBM (IBM )

IBM results, due Jan. 20, will test a key proposition: Can the brightest parts of the stock market continue to deliver stellar results despite the tough economy?

IBM may be a contrast to another tech giant, Intel (INTC ), which warned on Jan. 7 that sales dropped 23% in the fourth quarter. In 2008, “consumer spending dried up and it appears to have had a much more significant impact on Intel than IBM,” King says.

Analysts expect IBM to boost earnings by 10% in the fourth quarter, with sales down a modest 1.8% for the quarter.

“We have always believed in IBM’s ability to withstand the economic crisis and deliver better performance than its peers,” said First Global strategist Devina Mehra in a Jan. 9 research note. But though IBM may outperform its peers given its “robust business model that provides a steady flow of recurring revenues,” Mehra warned the tough economy won’t entirely spare IBM.

4. Johnson & Johnson (JNJ )

Given the weak economy, many investors have fled riskier stocks for the safety of the consumer staples and health-care sectors. Past recessions have shown that even cash-strapped customers continue spending on necessities like medical supplies and food. But how secure are those supposed safe havens in this slowdown?

Johnson & Johnson’s results, expected Jan. 20, will be an important test.

Rutherford is among the investors who have embraced a more defensive strategy in the past year by buying staples and health-care stocks. “We’re going to want to see that they’re holding up,” he says.

According to Reuters, analysts expect J&J to boost fourth-quarter earnings by 4.5% and to keep revenues flat. Even a slight uptick in sales might cheer investors. “Especially through these tough times, I’m pretty thrilled with that stability,” King says.

If earnings from staples and health-care companies disappoint investors, the effect on the stock market could be severe. These companies “are the backbone, the underlying strength of the economy,” Merrill says.

5. Exxon Mobil (XOM )

Expect little good news from energy companies like Exxon Mobil. A year ago, Exxon and rivals like Chevron (CVX ) and ConocoPhillips (COP ) were enjoying steadily rising energy prices and record profits. The collapse in the price of oil and other commodities has devastated the earnings outlook for one of the stock market’s largest sectors.

“Depending on how much [energy earnings] fall, they’re going to have the single biggest impact on earnings,” Merrill says. Stovall predicts “a sharp reversal of fortune” for the energy sector, which should see its first decline in earnings growth since the fourth quarter of 2006.

Early signs are not encouraging. On Jan. 8, Chevron warned its fourth-quarter earnings will be “significantly lower” than the previous quarter. Exxon and Chevron both report earnings on Jan. 30.

Steverman is a reporter for BusinessWeek’s Investing channel.