Earnings season hasn't started yet, and already investors are being bombarded with bad news even as signs continue to emerge that the economy is recovering.

Alcoa (AA), which unofficially kicks off earnings season next week, set the downbeat tone Thursday when it announced plans to shutter an idled aluminum smelter in Tennessee and reduce operations at a Texas plant as part of a planned 12% reduction in capacity. When it finally reports Monday, the company, which obviously lives and dies by aluminum prices, is expected to post its worst results since 2009.

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I recently argued on CNBC, however, that aluminum prices may stabilize if the capacity constraints take hold and if demand for the metal is bolstered by the automotive and construction sectors. Wall Street shares my optimism about Alcoa -- at least for now -- as evidenced by the $12.28 price target on the stock. That's more than a 30% upside over the stock's Thursday's closing price.

"Alcoa has a number of issues that are more specific to them," Thomas Villalta, the CIO of Jones Villalta Asset Management in Austin, Texas, who holds Alcoa among its $40 million in assets, said in an interview. "I really don't consider them to be a bellwether for the rest of the market."

Target (TGT), too, added to investors' worries after reporting worse-than-expected December same-store sales. Like other retailers that cater to the middle class, Target is paying the price for offering steep discounts and therefore lowering its fourth-quarter profit outlook. J.C. Penney (JCP) and Kohl's (KSS) are in the same situation, which is why shares of all three companies slumped Thursday.

Meanwhile, chains that cater to wealthier consumers, such as Macy's (M), posted strong December sales.

Best Buy (BBY), which had trouble filling some holiday orders, not surprisingly reported worse-than-expected sales. Villalta, who owns shares of Best Buy, argues that while this wasn't a "knockout quarter," it may not be as bad as the pessimists believe.

Indeed, not all hope is lost. The job market continues to improve. Unemployment fell to 8.5% in December, its lowest level in nearly three years, as companies added 200,000 jobs, better than economists had expected. Fewer businesses are laying off workers, which is another good sign.

Investors, though, continue to have plenty to worry about, including the debt crisis in Europe, which Robert C. Doll, the chief equity strategist for Fundamental Equities at BlackRock(BLK), argues must be addressed.

"At the same time, we don’t need Europe to solve all of its problems in 2012 for the world to achieve an OK year," Doll said in a statement. "Since there is already such a significant 'crisis premium' baked into the markets, just avoiding disaster could be enough."

Given the turmoil of the past few years, an OK year would suit many investors just fine.

Jonathan Berr is a freelance business writer. He owns shares of Target.