PREVIEW-Alcoa to post loss, but what does it mean for economy?

By Steve James

NEW YORK, July 5 (Reuters) - Alcoa Inc (AA.N: Quote, Profile, Research), whose results are traditionally viewed as an indicator of the country's economic health, is expected to post a third consecutive quarterly loss this week.

But many on Wall Street no longer see the aluminum producer's numbers as a bellwether portending either a deeper recession or an easing of the global downturn.

"It's a large company in a major industry and it is the first to report, so it gets special recognition," said Joseph Battipaglia, a market strategist at Stifel Nicolaus & Co in Yardley, Pennsylvania.

"But it's only telling you about the health of the aluminum industry and that's not very good right now.

"FedEx and UPS are better signs of a change in direction," he added, referring to the two largest U.S. shipping or package-delivery companies. "I wouldn't take what Alcoa says as a significant indication of how the American or global economy is faring."

Battipaglia said that even if Alcoa -- the first member of the Dow Jones industrial average .DJI to release earnings -- reported an upsurge of orders on Wednesday, it was no real sign of a turnaround. Most customers let their inventories go down in recent months, he noted, and were now restocking while aluminum prices are relatively low.

Charles Bradford, an analyst with Affiliated Research Group of New York, agreed that Alcoa's results were no weather vane.

"Some people out there think it's a leading indicator of the economy, but those people don't understand the company. It's an indicator only of the aluminum price.