The worry for the bulls was that with one or two big name earnings that were disappointing there could be a pretty large setback in the stock market. It didn’t take very long for that to happen. In fact it was this morning, on the first week of earning season. JP Morgan Chase reported earnings that beat analyst estimates, but the outlook for the bank and the industry as a whole didn’t exactly leave investors full of cheer.

The earnings beat was called one of “low-quality” by analyst David Trone. Fixed-income was worse than expected, revenue was on the light side, and probably most concerning of all there were no signs of traditional banking turning around in any major way. Jamie Dimon, CEO of JP Morgan, tried to hint at the fact business might get better in the second half of 2010, but he had no hard data or evidence that this will be the case. JP Morgan CFO Michael Cavanagh was asked about the banking business outlook for this year and he responded simply by saying two words “cautious outlook.” Cautious outlooks are completely understandable, but that certainly isn’t what the market or investors were hoping for from this banking bellwether.

Since JP Morgan has actually done better on the whole than most in the financial industry it is fair to say that expectations for earnings for the entire banking industry probably went down quite a bit on today’s news. Needless to say banking stocks are being hit pretty hard today, and it has definitely spread to the entire market, where the Dow is down by more than 100 points on the day.

Earnings season has a long way to go, but today is an example of the possible bumps in the road for the bulls as we continue to look for signs of a full economic recovery.