The market appears to have readjusted its prescription, as it's no longer peering at data through rose-colored glasses. June's jobless number has brought the crude reality of the recession into focus and cast a dark shadow over the market ever since. The Dow gave up over 600 points in the last month, since peaking this year at 8,799 on June 12. For the week ended July 10:

Dow: Down 1.6% to 8,146.52
S&P 500: Down 1.9% to 879.13
Nasdaq: Down 2.3% 1,756.03

Last week, the market remained skittish in the face of uncertainty regarding this week's earnings. A profit warning from Chevron ahead of its earnings report validated investors' fears for a problematic second-quarter earnings season. Calls for a second stimulus -- following a comment from Vice President Joe Biden that the administration underestimated the severity of the crisis -- only added to the jitters. The downward trend continued to hold for another week, as equity investors sought shelter in Treasuries. We saw the biggest demand since 1995 for a 10-year note auction, driving the yield on the Treasury bill to its lowest level since May.

Earnings season has arrived!
Alcoa (NYSE:AA) unofficially kicked off the second-quarter earnings season last week. The aluminum maker posted a narrower-than-expected loss, though results weren't exactly shiny. Despite an ugly quarter, a glance ahead isn't as dismal. The company says it sees signs of strengthening.

The most interesting part of the company's earnings report was that Alcoa’s CEO said Western aluminum producers should not rely on China, as the country will eventually become self sufficient in producing its own aluminum. Much of the commodity craze has been driven by the widely held belief that China's appetite for commodities, including metals, will be voracious in the long term. But Alcoa's CEO's remarks are a crack in that thesis from a reputable source.

Outlook for retailers remains gloomy as consumer dollars remain on ice
Retail sales gave us a read on the consumer as well as how retailers are currently wading through the recession. June retail sales were evidence that the consumer continues to hold back on discretionary spending. U.S. retail sales for stores open at least one year fell 4.9% on average in June, marking the tenth consecutive month retail sales have declined. Let's see if the all-important back-to-school shopping season will spur consumers to spend.

In other company news ...
After just 40 days, General Motors has emerged from bankruptcy at an almost unbelievably fast pace. Now comes the hard part. GM has been afforded a second chance. Now the question is whether the company can sell cars the consumer wants in order to build a sustainable recovery.

Meanwhile, Google (NASDAQ:GOOG) said it will construct a computer operating system called Chrome OS that would potentially compete directly with Microsoft (NASDAQ:MSFT).

What's ahead
This week second-quarter earnings season kicks up into high gear as Goldman Sachs (NYSE:GS), Intel (NASDAQ:INTC), Johnson & Johnson (NYSE:JNJ), and Yum! Brands (NYSE:YUM) report results on Tuesday. Google, IBM (NYSE:IBM), Harley-Davidson (NYSE:HOG), JP Morgan (NYSE:JPM), Nokia (NYSE:NOK), and Marriott (NYSE:MAR) report on Thursday. General Electric (NYSE:GE), Citigroup (NYSE:C), Bank of America (NYSE:BAC), and BB&T (NYSE:BBT) report on Friday.

This earnings season is bigger than most and will set expectations for where the market goes from here. According to Thomson Reuters, companies in the S&P are forecast to post a 36% decline in second-quarter earnings, on par with the first quarter.

Economic data this week includes producer and consumer price indices (these provide readings on inflation). Inflation hawks appear to be taking a break after the June jobs number. Also on tap are retail sales, industrial production, and housing starts, which can be volatile.

If you're a long-term investor, use these quarterly reports as a way to take the temperature of companies you're considering. You'll be able to determine if a company is merely suffering from the recession or if there are company-specific problems that might signal problematic investments.

 For related Foolishness:

Fool contributor Jennifer Schonberger owns shares of Microsoft, Johnson & Johnson, and Bank of America, but does not own any of the other companies mentioned in this article. Google is a Motley Fool Rule Breakers selection. Intel, Microsoft, and Nokia are Motley Fool Inside Value recommendations. Johnson & Johnson is a Motley Fool Income Investor selection. The Fool owns shares of Intel. The Motley Fool has a disclosure policy.