Wall St Week Ahead: Stocks eye regional banks, short-sale rule

By Deborah Jian Lee

NEW YORK, July 18 (Reuters) - In the heart of earnings season, U.S. stock market investors will scrutinize a raft of regional bank earnings next week for more write-offs that could send the market tumbling.

The S&P 500 and the Nasdaq snapped a six-week losing streak with financials helping to drive the market higher on the back of stronger-than-expected results from the likes of Citigroup, JPMorgan Chase and Wells Fargo. A sharp drop in oil prices also improved sentiment and lifted the market.

For the week, the Dow Jones industrial average .DJI gained 3.57 percent, its best week in three months, while the Standard & Poor's 500 Index .SPX rose 1.71 percent and the Nasdaq Composite Index .IXIC advanced 1.95 percent.

Still, while the week ended with financial services as the second-biggest boost to the S&P 500, regional banks were one of the heaviest drags. The S&P Regional Banks index ended Friday's session down 0.8 percent.

After U.S. banking regulators swooped in last Friday to take over IndyMac Bancorp IncIMB.N, making it the fifth U.S. bank to fail this year, investors will key in on regional bank results as a measure of how the U.S. banking system is holding up in a fragile economy.

"Most of the major financial institutions have reported, so there's going to be attention on the flow coming in from the regional banks. We'll be watching for write-offs on the regional banks," said Fred Dickson, market strategist and director of retail research at D.A. Davidson & Co in Lake Oswego, Oregon.

Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz), the No. 2 U.S. bank, headlines the week with its Monday earnings report. Regional banks in the spotlight will be Regions Financial Corp (RF.N: Quote, Profile, Research, Stock Buzz), Fifth Third Bancorp (FITB.O: Quote, Profile, Research, Stock Buzz), SunTrust Banks Inc (STI.N: Quote, Profile, Research, Stock Buzz) and Wachovia (WB.N: Quote, Profile, Research, Stock Buzz).

The coming week will also usher in earnings results from large-cap companies, including Dow components Pfizer Inc (PFE.N: Quote, Profile, Research, Stock Buzz), AT&T (T.N: Quote, Profile, Research, Stock Buzz), and Caterpillar (CAT.N: Quote, Profile, Research, Stock Buzz), as well as Nasdaq stalwarts Apple Inc (AAPL.O: Quote, Profile, Research, Stock Buzz), and Yahoo! Inc (YHOO.O: Quote, Profile, Research, Stock Buzz).  Continued...