Stocks appear to have lost the upward thrust in recent days that pushed them to new highs for the year, with the absence of any fresh catalysts as the primary reason for this tentative mood. Pre-open sentiment indicates a modestly lower open today following a positive session on Wednesday and negative one the day before.

The Q1 earnings season that takes the spotlight with Monday’s Alcoa’s (AA –Analyst Report) release will likely be the next major catalyst for the market. As we all know, estimates for the quarter really took a beating over the last three months, with earnings growth for the period on track to be deep in the negative- the fourth quarter in a row of earnings declines for the S&P 500.

The big negative estimate revisions for Q1, which have fallen the most of any recent period, has raised hopes among some that actual results could surprise to the upside. The recent moderation in the dollar’s value and some signs of “green shoots” in the U.S. economy, particularly on the manufacturing side, are helping keep these hopes in place.

Initial Q1 earnings reports from S&P 500 members with fiscal quarters ending in February, which counted as part of the Q1 earnings season tally, have generally been favorable. The sample size is small at this stage as only 21 index members have reported Q1 results, but a bigger proportion of these companies has been able to beat consensus EPS and revenue estimates.

For these 21 index members, total earnings are down -6.2% from the same period last year on +3.5% higher revenues, with 86.4% beating earnings estimates and 59.1% coming ahead of top-line expectations. We should keep in mind, however, that while positive surprises are tracking better relative to other recent periods, the growth pace is on the weaker side.

Given the downbeat earnings picture that has been coming out of the last few earnings reporting cycles, any improvement will be welcome. That said, the growth challenge doesn’t seem to be going away any time soon. If anything, the growth picture is only getting worse, with estimates for Q1 as well as Q2 still going down. It is hard to see sentiment changing in any meaningful way without any improvement in the earnings outlook.