Don't look now, but the U.S. stock market may be headed for another royal smackdown with fears that first-quarter results will fail to show signs of an upturn for Corporate America.

Fledgling indications of a return to profitability by some of the biggest U.S. banks had helped fuel a March stock market rally. But as Alcoa Inc prepared to kick off the earnings season on Tuesday, expectations of disappointing results drove its shares down and served as a harbinger of what many believe lies in store for first-quarter results.

The S&P 500 slumped 19 percent in the first two months of 2009 as companies published their worst quarterly results in more than 80 years.

It didn't help that companies made their wretched fourth-quarter results even harder to swallow by following up with bleak forecasts for the year ahead, while others withdrew or refused to provide guidance, citing the unprecedented economic situation.

The S&P 500 rallied 8.5 percent in March, before stalling out this week, but a repeat of cautious or negative outlooks could throw cold water on hopes that the worst is past for the economy.

It is a potential speed bump for this rally, and I think the main reason that it could be is that investors have begun to price in improvement across the first quarter, said Jeff Kleintop, chief market strategist at LPL Financial in Boston.

The first quarter is going to be terrible but was it getting better as we got to the end of it? Does that paint a better outlook for guidance for the second quarter and maybe all of 2009?

First-quarter corporate earnings for S&P 500 companies are expected to decline by 36.7 percent, according to Thomson Reuters data. In comparison, fourth-quarter earnings slid by 67 percent.

Results in all 10 of the S&P's sectors are expected to fall this quarter. Last quarter, three sectors stayed above water, led by the health-care sector with 10.5 percent growth, followed by a gain in consumer staples, while the utilities was flat.

From a valuation perspective, stocks are a bit more expensive this time around. The S&P 500 is trading at 13.3 times expected earnings over the next 12 months, compared with 12.5 percent at the end of 2008.

The valuations you see today are not stretched in any way, in my opinion, but they certainly don't offer the attraction that they did two months ago, said Kurt Brunner, portfolio manager at Swarthmore Group in Philadelphia, Pennsylvania.

Some market watchers are optimistic stocks have put in a bottom as recent retail and housing data have shown green shoots that the economy is stabilizing and are hoping profits will surprise skeptics to the upside. Others, however, fear the rally will prove a product of oversold conditions rather than any real underlying improvement.

As well as the encouraging economic data, comments from major U.S. banks including Citigroup and Bank of America that they had been profitable in the first two months of the year fueled the March rally.

Analysts have said that the struggling sector, which is at the heart of the economic crisis, will have to lead the market back up and investors will be watching for signals that the worst is past.

Investors will be willing to give companies the benefit of the doubt on depressed earnings for the first quarter but they're certainly going to be looking for some guidance that the companies have some optimism and visibility as to what's coming next down the road, said Dean Curnutt, president of Macro Risk in New York.

To that end, if you look at the financial sector as still 10 percent of the overall S&P market cap, its ability to avoid further write-downs in a lot of these toxic assets is going to be an important part of their first-quarter earnings.

Banks typically write down assets at the end of a quarter, making investors wary of surprises still lurking on their balance sheets. In addition, the chief executive of JPMorgan Chase , Jamie Dimon, said at the end of last month that March was a little tough.

Another area of interest will be health care, which has become one of the biggest sectors on the S&P as investors have been drawn to its defensive nature, typically seen as performing better during a recession than its more cyclical peers.

While the group is expected to see a decline in earnings compared to the same quarter a year ago, it is still expected to outperform the rest of the market, falling just 3.1 percent.

But Kleintop noted that the sector could be hurt by uncertainty of what impact U.S. President Barack Obama's health care plan will have on company profits.

Forecasting future profitability for many of these firms, particularly HMOs, but it certainly applies to pharmaceuticals as well, is very unclear as we move forward and that uncertainty is going to hang over that sector despite relatively resilient earnings results, said Kleintop.

Pennsylvania S&P