The flood of earnings reports are hitting the half way mark. Results haven't been bad, but the macro is overwhelming everything, and fourth-quarter guidance is slipping. Here's a general rule for the stock market: earnings are the main determinant of stock prices in the long run, but in rare cases macro trends can overwhelm their message. That seems to be what is happening now.
Overall, more good news than bad news. With earnings, however, it's the trend in the forward quarter that matters: is the trend up or down? In this case, it is starting to trend down, but not by much. Fourth-quarter estimates are expected to be up 9.1%, down from 11.0% on Oct. 1, and Q1 2024 has gone from 9.6% to 9.0%. That isn't a huge drop, but it is a change in trend. Earnings estimates have been stable for months, and that is now changing.
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