Corporate earnings promise to beat analysts' expectations for the just-completed fourth quarter, but translating the good news into strong stock gains will be challenging for investors.

Recent optimism has pushed the S&P 500 index <.SPX> up 10.8 percent since the end of September. But analysts are questioning how much more stocks can rise as the quarterly earnings season begins Monday, when aluminum maker Alcoa Inc reports results after the market closes.

Fourth-quarter earnings for companies in the S&P 500 are expected to rise sharply from a year ago. Still, analysts' estimates have barely changed since the spring despite recent upbeat economic news.

That could be a sign that company and analyst targets will prove too conservative once again. Stronger-than-expected profits have already bolstered stocks since the market lows of March 2009.

After a large percentage of corporate earnings beat expectations in one quarter, analysts typically revise their estimates higher for the coming quarter.

But targets by companies and analysts have stayed conservative as the economy recovers, even as stocks have bounded higher.

Just because (earnings) are good doesn't mean the market or stocks will go up. If a stock's had a nice run, you could see a little profit-taking on the news, said Robert Auer, senior portfolio manager at SBAuer Funds in Indianapolis.

Fourth-quarter earnings for S&P 500 companies are expected to increase 32 percent from a year ago, according to Thomson Reuters data. In April, the fourth-quarter forecast was for a 31.5 percent increase.

Similarly, Brown Brothers Harriman projects earnings growth at 34 percent for the quarter, but factoring in the analyst underestimation it bumps up its growth forecast to 41 percent to 42 percent.

Normally, high beats get analysts to bump up their subsequent quarters and that stopped happening in May, said Charles Blood, senior market strategist at Brown Brothers Harriman. The lack of adjustment for upbeat economic news is one more reason to think the estimates are too low.

About 72 percent of S&P 500 companies beat profit estimates in the third quarter, well above the 62 percent in a typical quarter, Thomson Reuters data showed. The percentage of beats has been above average in recent quarters.

The U.S. economy grew at a 2.6 percent annualized pace in the third quarter and analysts expect gross domestic product to expand at a 3 percent to 3.5 percent pace over the final three months of the year.

BANKS, ENERGY LIKELY OUTPERFORMERS

Some analyses suggests a small number of major stocks have the potential to move the market. Banks and energy will be the best sectors to find market-moving beats, according to an analysis of Thomson Reuters StarMine data by Michael Tarsala, Reuters quantitative analyst. StarMine weights forecasts according to analyst accuracy.

Two stocks in particular -- ConocoPhillips and Bank of America Corp -- could move the entire market because of their size and expected results, Tarsala said.

Financials and energy have been strong performers of late, with the S&P Financial Index <.GSPF> up 13 percent since the end of September. The energy sector <.GSPE> is up 21.5 percent in that period.

The analysis shows 50 companies in the S&P 500 that could beat earnings estimates by 2 percent or more, according to StarMine.

Sectors tied to growth, including industrials and materials, have outperformed other groups in recent earnings periods.

Some of the more cyclical areas of the economy have been the ones that have been posting the big growth and the big surprises -- the auto sector, the industrials, tech, said Dirk Van Dijk, senior equity strategist at Zacks Investment Research in Dayton, Ohio.

Denver-based investment firm T3 Equity Labs forecasts that the S&P's telecommunications sector has the highest probability of an upside earnings surprise among the S&P's 10 sectors, based on its own research model.

Founder Mike Jackson said telecom jumped to the No. 1 spot from the No. 3 recently in his sector list and has a rapidly improving chance of upside surprises.

Energy is ranked second, he said, but noted that it fell from No. 1 ranking recently.

With telecoms, the front-end factors that I used improved dramatically ... sentiment is improving, but it's not being reported that way, he said.

Among other top names that could see earnings beats: Boeing Co , which StarMine forecasts will be 2.9 percent above the Thomson Reuters consensus estimate; and Dow Chemical Co , which StarMine forecasts at 4.1 percent above the consensus.

Alcoa's StarMine forecast is just 0.4 percent above consensus, the data showed.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Interactive: Estimated earnings growth by sector http://r.reuters.com/nux55r

U.S. investment banks: falling earnings estimates Fourth quarter earnings estimates today versus 30 days ago

http://r.reuters.com/mew55r For an earnings report on Reuters Insider, see http://link.reuters.com/ted25r

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(Reporting by Caroline Valetkevitch; editing by Jeffrey Benkoe)