Stocks were a lot less enthusiastic to last week’s labor market reports than would otherwise have been expected, likely reflecting lingering concerns about Europe. The going is expected to be even tougher this week as the economic calendar is relatively thin and the fourth quarter reporting season just gets underway. This means that Europe will remain in the spotlight, with headlines from the region moving the market.

The only notable economic report this week is the December Retail Sales reading on Thursday. Other than that, we will have International Trade data on Friday and the Jobless Claims numbers on Thursday. The fourth quarter reporting season gets underway with Alcoa’s ( AA - Analyst Report ) results after the close today. But the only other notable earnings report the rest of this week is from J.P. Morgan ( JPM - Analyst Report ) on Friday.

Earnings expectations remain quite low at this stage, reflecting the maturity of the earnings cycle, developments in Europe and the slowdown in China and other emerging markets. With aggregate margins reaching prior cyclical peak levels and top-line gains getting difficult to come by given the tougher nominal global growth backdrop, the growth numbers for the fourth quarter are expected to be much lower than what we have been seeing thus far in this earnings cycle.

In corporate news, Bristol-Myers Squibb ( BMY - Analyst Report ) is acquiring Inhibitex (INHX), the developer of hepatitis-C, for $2.5 billion in cash. The all-cash offer works out to a very generous 163% premium to Inhibitex’s Friday closing price. Shares of Idenix Pharmaceuticals ( IDIX - Snapshot Report ) are also expected to be in the spotlight after the company announced positive results from its hepatitis C clinical trial.

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