U.S. corporate earnings have been stellar.

Mark Luschini, chief investment strategist at Janney Montgomery Scott, wrote the following in his weekly note regarding the third quarter earnings season:

- Of the 306 companies that have announced their results, 64 percent have beaten consensus earnings expectations while 67 percent have exceeded analysts’ estimates for revenues

- Third quarter results will likely have beaten estimates for the tenth consecutive reporting period

- Third quarter results will likely mark the eight consecutive quarter of double-digit profits gain

- Third quarter results will likely culminate in a trailing year’s worth of profits greater than the previous all-time peak which occurred in 2007

“If even a modicum of this pace of profit momentum continues in the coming quarters, it bodes well for stock prices,” said Luschini.

Moreover, many corporations are extremely safe in their strong balance sheets; nonfinancial companies had more than $2 trillion in cash at the end of June 2011.

However, Luschini added that “relief from the macro headlines” is also important for the financial markets. 

Indeed, despite the stellar earnings, U.S. stocks are still almost 30 percent off its all-time high.

Investors are clearly worried about “macro headlines,” which include the threat of a Eurozone-induced global financial crisis. Another worry in the more distant future is the U.S. budget deficit and the threat of higher taxation.

Investors are also concerned about the sustainability of a corporate-led economic and market recovery.

The U.S. corporate recovery has been largely driven by two factors: efficiency gains and global economic growth.

Most experts agree that corporations have pushed efficiency gains close to the limit. The global recovery is also slowing down as countries like China have rolled back stimulus policies to cool their heated economies.

Ultimately, a sustained U.S. recovery depends largely on the U.S. consumers.  Therefore, as long as the consumer is unable and afraid to spend money, corporations and investors will remain cautious.