Prospects for corporate earnings are dimmer in the coming quarters, even though reports so far this quarter have been relatively bright.
Third-quarter reports among the big names have been reasonably solid, with Google , McDonald's and others reporting strong results.
But, unless there's a turnaround in the outlook for the U.S. economy, the next few quarters may be less rosy.
The next few days may be tricky for stock investors, too, as the market waits to see whether European leaders can find a way to solve the growing euro zone debt crisis.
The Standard & Poor's 500 index <.SPX> rose 1.1 percent last week on hopes leaders were nearing a comprehensive plan that would stop the crisis from worsening. But progress at a summit on Sunday was slight after France bowed to German opposition and abandoned a proposal to use unlimited European Central Bank capital to boost a euro zone rescue fund.
Leaders will hold another summit on Wednesday.
We just don't know yet what form the solution is going to take and what it's going to cost, said Michael Woolfolk, a senior currency strategist at BNY Mellon in New York.
With so much focus on Europe, earnings -- even with most companies beating expectations -- have been given less of the spotlight.
At the same time, S&P 500 earnings forecasts for the fourth and first quarters have come down since the start of October, especially in the materials, energy and financial sectors, according to Thomson Reuters data.
That's part of this fear factor that has gripped not only the marketplace but corporate America as well, said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
Much of what's driving worries about earnings is related to expectations for less demand from Europe and other parts of the world, including China, where indicators show growth is slowing.
The sovereign debt crisis in Europe has plagued markets for months, and the U.S. economy has been a worry, too, with the nation's high unemployment rate among the chief problems.
Much of the third-quarter profit strength stems from still-strong international revenue growth, according to a report from Thomson Reuters earnings analyst Jharonne Martis.
There is still a dichotomy between robust earnings growth and global economic uncertainty, the report said.
Foreign sales total 30 percent on average for S&P 500 companies.
Of the 133 S&P 500 companies that have reported earnings to date, 68 percent have come in above expectations, above the long-term average, the Thomson Reuters data showed.
On next week's earnings agenda are results from more top S&P 500 names: Caterpillar , Coach , Boeing and Procter & Gamble Co among others.
The data shows S&P 500 earnings are expected to have risen 14.7 percent in the third quarter from a year ago, compared with an October 3 estimate for 13.1 percent growth.
Projections for the fourth quarter are for growth of 12.5 percent -- down from an October 3 estimate of 15 percent -- and forecasts for the first quarter of 2012 are for growth of 7.6 percent -- down from an October 3 estimate of 10.2 percent.
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Some analysts said the changes in earnings estimates may just be catching up to sentiment already priced into stocks.
If so, an improvement in the outlook would make the forecasts too low.
If Europe does satisfy the markets (with a solution to the debt crisis), then I think these estimates will be proven wrong, Cardillo said.
As long as the U.S. economy doesn't fall back into recession, corporations can deliver profit growth, strategists argued.
Among next week's data is a report on U.S. economic growth on Thursday. U.S. gross domestic product likely grew at a 2.5 percent annual rate in the third quarter, according to a Reuters survey, a improvement from 1.3 percent in the second quarter.
The general macroeconomic data in the U.S. continues to confirm a protracted, slow painful recovery but not a recession at this stage. And if it continues to maintain that however slow pace, on the upside the earnings should be supported by economic activity, said Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Maryland, which manages about $14.8 billion.
(Reporting by Caroline Valetkevitch; additional reporting by Steven C. Johnson; Editing by Kenneth Barry and Diane Craft)