Earnings will be the major focus for investors in the week ahead, as they home in on whether rising costs are squeezing margins and signaling a build in inflationary pressures.

From Coca-Cola and IBM to Johnson & Johnson and Netflix, investors will hear from a broad swath of corporate America.

So far, with one week in, companies are beating earnings estimates by a wide margin of more than 84%, according to Refinitiv.

This three-month period is the first to be compared to year earlier profits that were affected by the pandemic. Profit growth for the S&P 500 is a stunning 30.2% for the quarter so far, based on actual reports and estimates.

That makes it the best three-month period since the third quarter of 2010, according to FactSet.

Major banks, like JPMorgan Chase, Goldman Sachs and Bank of America reported better than expected profits in the past week.

The S&P 500 ended the week at a record high of 4,185, a gain of 1.4%. The Dow, higher for a fourth week, gained 1.2 to end the week at a record 34,200. Nasdaq gained 1.1% for the week, finishing at 14,052.

Utilities was the best performing major S&P sector, gaining 3.7%, followed by materials, up 3.2% and health care, up 2.9%. Technology was up 1%. Financials were up 0.7%, while industrials were up 0.6%.

Lori Calvasina, head of U.S. equity strategy at RBC, said she is watching the coming week’s earnings for signs of margin pressures from higher commodity prices, supply chain issues and other cost factors.

“Those big forces that are threatening margins right now don’t really apply to financials. They apply more to industrial companies, the material companies and consumer companies,” she said.

“I think [sectors] like the industrials will give you color on margins,” Calvasina added. “Margins really are the big question mark going forward. I’m definitely watching and listening to see what companies are going to say about taxes.”

President Joe Biden has proposed raising corporate taxes to 28% from 21% to help pay for his infrastructure plan.

While the fate of the tax hike is still not clear, the increase in other costs is apparent. Fuel costs have risen sharply with a 30% rise in oil prices since the beginning of the year. Lumber prices in the futures market are at an all-time high and copper futures are up about 17% year-to-date.

Calvasina said companies face a headwind and a tailwind.

“Companies are saying we found new ways to cut costs. When revenues come back, margins are going to explode to the upside,” she said. “Some of the Covid-related costs will come down. Those are some of the positives.”

But not every company will see those benefits. “We could start to see wage pressures come back. Rising commodity costs — increases in PPI and increases in CPI — those are negatives for margins,” Calvasina said, referring to the producer price and consumer price indexes.

Peter Boockvar, chief investment officer at Bleakley Advisory Group, said he is also watching the margin comments carefully for impact on individual stocks, but also for what they broadly say about inflation seeping into the economy.

“What’s going to be the most interesting thing about earnings are profit margins. Some companies are going to get squeezed because they’re going to see price increases and others aren’t because they can pass it on,” said Boockvar.

He said he will pay close attention to whether the semiconductor shortage is showing up in tech companies’ earnings. Automakers have already taken a hit and have scaled back production due to the lack of chips.

The CPI for March showed a pick-up in headline inflation to 2.6% year-over-year. A 9.1% jump in gasoline prices contributed to the gain.

Some of the gains in inflation this spring are expected to be temporary because of the comparison to very low levels last year when the economy was shutdown.

Other than earnings, the week should be fairly quiet. Federal Reserve speakers have taken a hiatus and are in a blackout period ahead of the late April meeting.

“It’s really going to be attention shifting to earnings and the inflation story,” said Boockvar.

In the past week, economic reports underscored how strong the economic momentum could be in the second quarter. Retail sales for March were up nearly 10%, and jobless claims were the lowest of the recovery.

There is little data in the week ahead, aside from PMI manufacturing and services data Friday. But the markets will keep a close eye on unemployment figures after Thursday’s report of 576,000 new claims — the lowest level since the early days of the pandemic.

“The large claims decline suggests that job separation rates may finally be normalizing, a good sign for April payrolls,” note Barclays economists. A surprise 916,000 jobs were added in March, and economists have said they now expect a string of reports showing payrolls are up by 1 million or more.

However, Stephen Stanley, chief economist at Amherst Pierpont, says it may be too early to read too much into the claims data, and the coming week’s report will be important.

He said the drop in claims was driven by sharp drops in a number of states, including more than half in California and even larger percentage declines in Kentucky and Virginia.

 ”Unfortunately, I have no confidence that these moves won’t be at least partially reversed next week,” he wrote. ”Continuing claims in the special pandemic programs continue to seesaw up and down every week, with the latest reading, for the period ended March 27, being a down week.”

Stock investors will also be watching the bond market, where yields declined in the past week and then reversed. The 10-year Treasury was at 1.59% Friday, after tumbling sharply on Thursday.

Yields move opposite price, and the 10-year is the most widely watched bond security, as it impacts mortgage rates and other loans.

“The 10-year will now trade in the 1.50% to 1.75% trading range,” said Boockvar.

“It’ll break below that if inflation is transitory and it will break above if it’s proven to be otherwise,” he added. “I think we priced in the last inflation stats and then we’ll take into account what the real world is saying, from companies.”

Monday

Earnings: Coca-Cola, IBM, United Airlines, Zions Bancorp, FNB, Steel Dynamics

Tuesday

Earnings: Johnson & Johnson, Travelers, Procter and Gamble, Netflix, Abbott Labs, CSX, Lockheed Martin, Intuitive Surgical, Tenet Healthcare, Philip Morris, Northern Trust, Fifth Third, KeyCorp, Comerica

Wednesday

Earnings: Verizon, Chipotle, Whirlpool, Nasdaq, Baker Hughes, Anthem, Netgear, Spirit Airlines, Canadian Pacific Railway, Lam Research, Discover Financial, SLM, Halliburton, Knight-Swift Transportation

Thursday

Earnings: AT&T, Intel, D.R. Horton, American Airlines, Union Pacific, Alaska Air, Pentair, Tractor Supply, Celanese, Seagate Technology Biogen, Dow, Credit Suisse, SAP, Boston Beer, Mattel, Snap, Valero Energy, Freeport-McMoRan, Quest Diagnostics

7:45 a.m. European Central Bank rate decision

8:30 a.m. Initial jobless claims

10:00 a.m. Existing home sales

Friday

Earnings: American Express, Honeywell, Daimler, Regions Financial, Schlumberger, Kimberly-Clark

9:45 a.m. Manufacturing PMI

9:45 a.m. Services PMI

11:00 a.m. New home sales