Don't expect the stock market to rally on the back of blowout corporate earnings, Bank of America says

• Wall Street is expecting more earnings beats to come from S&P 500 companies this earnings season.
• But a jump in earnings doesn't always result in a lock on hefty market returns, BofA analysts wrote.
• 60% of losing quarters since 1996 have taken place in quarters with earnings beats, the firm said.

Earnings beats in the second quarter look set to climb after the strongest quarter on record but such figures provide no guarantee that US equities will follow suit in running higher, according to Bank of America.

A fresh batch of corporate financial results is set to start rolling in on Tuesday, led by investment banks Goldman Sachs and JP Morgan Chase, followed by Citigroup and Morgan Stanley on Thursday. The reports arrive at a time of record highs for the S&P 500, whose return of 16% so far this year ​​has been "entirely driven" by rising earnings estimates of 21%, BofA said in a research note Monday.

Consensus estimates for per-share earnings for the second quarter have climbed by 7% to $45.01, the firm said, marking the biggest upward revision since regulatory rules governing information disclosures by companies went into effect in late 2000. The rosier outlook follows a record 23% beat in earnings in the first quarter of this year.

Quarterly earnings surprises and market returns have been correlated by 32% since 1996. However, "strong earnings don't always translate to strong market returns," wrote BofA equity strategists led by Savita Subramanian.

60% of down quarters since 1996 - or 75% of down quarters excluding the global financial crisis - have occurred in quarters with earnings beats, they said. "In 2000, despite earnings beating consensus for 10 straight quarters, the S&P 500 declined for four consecutive quarters," said Subramanian.

BofA sees second-quarter per-share earnings beating by 11%, or $50, which would translate into growth of at least 79% year-over-year. It said early reporters and macro indicators suggest a beat of 3% to 20%.

"Continued earnings momentum should refuel investors' confidence in the recovery amid slowdown concerns and drive a rotation back into Value," the analysts said.

All 11 of the S&P 500's sectors are expected to turn in higher earnings, led by the energy and industrials groups, according to FactSet.

BofA's earnings report is scheduled to be released on Wednesday.