The S&P 500 Index really needs to break the 1,475 level in order to achieve a meaningful breakout from its current consolidation, which has lasted just over a month. Frankly, I’ll be surprised if it can do so; this stock market looks tired and spent. As a generality, I wouldn’t be buying stocks in the large-cap space at this time; I’d hold out for the next correction. But the stock market today is right where it should be—it’s not too hot or too cold; therefore, it’s unclear as to how things will end up this year.

Corporate earnings are mostly coming in as expected, and so is visibility. You can bet that companies will be conservative with their year-end forecasts; corporate earnings are managed and that’s a fact of life in the stock market. What we haven’t had so far are any major home runs, and it’s no surprise. It’s pretty difficult for corporate earnings to really accelerate in an environment with very little economic growth.

Corporate earnings from Johnson & Johnson (NYSE/JNJ) were good, and the stock provided a boost to the Dow Jones Industrials. I think PepsiCo, Inc. (NYSE/PEP) is representative of the state of corporate earnings and the stock market. The company recently beat consensus for the third quarter, but maintained its full-year outlook to be on the safe side. PepsiCo’s stock chart appears below:

Chart courtesy of www.StockCharts.com

Corporate earnings from the financials have come in mostly as expected, and the group moved slightly higher. But corporate earnings from benchmark technology stocks have been disappointing so far, with International Business Machines Corporation (NYSE/IBM) and Intel Corporation (NASDAQ/INTC) reporting challenging revenue conditions. (See “Will the Stock Market Tank On Earnings Warnings?”) Intel’s stock chart does not look very encouraging:

Chart courtesy of www.StockCharts.com

We’ve had some dividend increases, but not as many as I hoped for, and I think this plays into the conservative corporate outlooks going into 2013. Despite large cash positions and extremely healthy balance sheets, large-cap companies are keeping the cash close to home; they are seemingly as uncertain about the current state of the economy as Main Street.

Corporate earnings need to show meaningful growth if the stock market is to accelerate going forward, and right now, it doesn’t look like this is going to happen. The stock market went up this summer based on expectations for a third round of quantitative easing (QE3), not because of expectations for strong corporate earnings. Now that corporate earnings are basically meeting expectations, the stock market has to figure out where it wants to go next. More consolidation is my bet.