With only a few companies left to report earnings, we are currently working on a project for our subscribers that highlights all of the trends from the 4th quarter earnings season. One topic that we focus on is the number of companies that are guiding future earnings higher or lower. The charts below highlight that while the number of S&P 500 companies that guided higher this quarter is slightly above average, it didn't come close to matching the amount that guided higher from the second quarter of '05.
The S&P 500 is down over 2.5% since AA reported on January 9th, so it has been a pretty tough earnings season. Part of the reason for this drop may be that expectations for the 4th quarter (made in the 2nd and 3rd quarters) were simply too high.