Equity markets have been extremely rocky as of late, with many sectors oscillating between heavy gains and losses thanks to a variety of new data points from around the world. As a result, many investors have placed a renewed focus on firms targeting "safer" industries such companies operating in the consumer staples field. Some of these firms, especially those targeting consumers in the lower end of the market, have struggled to return to high growth levels since the economy remains incredibly weak for low skill workers. Meanwhile, many in the high end of the market have experienced a resurgence as of late thanks to an optimistic mood among wealthier consumers. This growing divergence between the fortunes of high- and low-end firms puts many companies that target the middle of this market in an extremely difficult position since expectations remain high although their products generally do not have the profit margins of many of their higher end peers. One key company that finds itself in this situation is Procter & Gamble (NYSE: PG), one of the largest consumer product companies in the world.

The Cincinnati-based consumer product giant is scheduled to post earnings before the bell today, potentially setting the tone for a wide variety of companies and even the economy as a whole. "P&G is the quintessential consumer staple," said Matt McCormick, an investment analyst at Bahl & Gaynor. "Diapers and shaving cream aren't the sexiest of products, but they are needed." Due to this, the company's report and outlook for the new year are likely to be highly anticipated and could move the markets.

Wall Street analyst consensus calls for a profit of $1.10 a share on revenues of $21.51 billion which compares relatively unfavorably with the year-ago period, in which the company posted $1.49 in earnings on lighter revenues of $21 billion. However, earnings saw a massive boost in the year-ago period from the sale of the company's prescription drug unit, which significantly increased that quarter's profits. Without that event, the company's earnings would have been $1.02 a share, suggesting that, upon closer examination, if PG hits its marks, it will actually represent reasonable levels of growth for the firm [see Three Pure Play Consumer Discretionary ETFs].

Of particular concern to investors is likely to be the company's forecast for growth prospects in developed markets which -- thanks to market saturation -- have declined significantly in the past few years. With that being said, the company has been able to post solid growth levels in emerging markets but many will like to see a strong showing out of its more traditional regions as well. Another key point to watch in PG's report is the impact of commodity prices on the company's bottom line. Although likely not as important as the uptick might be to more food-based companies, Procter & Gamble could forecast weaker profits based on this trend which could help to reduce demand in a number of more commodity intensive consumer product companies, potentially hurting the industry as a whole [read Who Else Wants Ex-Sector ETFs?].

One fund that looks to be especially in focus given this key earnings report is State Street's Consumer Staples Select Sector SPDR (NYSE: XLP). The fund tracks the Consumer Staples Select Sector Index which includes companies from the following industries; food & staples retailing; household products; food products; beverages; tobacco; and personal products. XLP offers its top allocation to PG at just under 15.3% while also giving high weightings to Phillip Morris International, Wal-Mart Stores, and Coca-Cola [see more holdings of XLP here].

Over the past 52 weeks the fund has risen with the overall market, posting gains of 12.3% during that time period, however, its gains have moderated in recent weeks as investor optimism has seemingly topped out for the near term. As a result, today's crucial earnings report from PG is likely to either help XLP break through its short-term resistance, or fall back down again below the $28 mark. Either way, look for investors to post a significant reaction to any news out of this market bellwether in today's trading session [see Three Low Beta Equity ETFs for a Volatile Market].

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