This has been the summer of raging uncertainty in corporate America.
The second-quarter earnings season, which began two weeks ago, has seen positive and negative extremes. But the earnings reports and the company comments that accompanied them have given Wall Street little direction on where the economy and the stock market are heading.
"My crystal ball is still fuzzy," said Charles L. Hill, director of research at Thomson First Call. "I thought we would get more clarification on the outlook for the third and fourth quarters, but for every positive we get a negative."
Corporate performances overall seem impressive in the two-thirds of the Standard & Poor's 500 companies that have reported results. About 63 percent beat earnings expectations, 24 percent matched estimates and 13 percent fell short, according to Thomson First Call.
The number of companies beating or meeting estimates is in line with historic averages, and the percentage of those that disappointed Wall Street is much better than the 20 percent that typically do so, Hill said.
But many companies guided analysts' expectations down so they could beat the revised number, said Barry L. Ritholtz, market strategist at the Maxim Group, a New York money management firm.
The tactic is not new. But it was expected to stop after accounting shenanigans of the last two years came to light, Ritholtz said.
"It's hard to get excited about the numbers when basically you have a world class sprinter leaping over a 6-inch hurdle," Ritholtz said.
Another discouraging factor is that company forecasts for the remainder of the year are nothing to get excited about. That's important because Wall Street typically looks forward and doesn't dwell on the quarter that just ended.
The stock market already has reacted to a great deal of the second-quarter earnings growth - currently estimated at 8 percent over the same quarter last year. Those expectations fueled the market rally this spring and early summer.
Market strategists now want to hear what corporate executives say about hiring, capital spending and sales growth in the third and fourth quarters. And there's no clear, positive message to hear.
"We ought to be hearing more positive comments than we are," Hill said. "I'm not seeing much change in the tone of what companies are saying about the outlook going forward."
Also muddying the second-quarter picture is that earnings were boosted by currency gains from the weaker dollar, and those aren't likely to occur every quarter.
When companies translate their overseas profits into U.S. dollars, they record one-time gains.
Nike Inc., Caterpillar Inc. and United Technologies Corp., to name a few, all boosted earnings with currency gains.
"These companies had good earnings, but it wasn't really because they had higher revenue," Ritholtz said. "They got a huge benefit from the weak dollar."
Hill estimates that currency gains improved revenue and profits among S&P 500 companies by about 2 percent in the second quarter.
To put that in perspective, the technology sector is expected to have earnings growth of 4 percent in the second quarter. That means that without the currency gains, the growth rate would be a paltry 2 percent.
"We ought to be seeing more top-line growth if this economic recovery is going to have staying power," Hill said.
Some companies do predict better times ahead.
Texas Instruments Inc. of Dallas beat Wall Street's second-quarter earnings expectations and said third-quarter sales may increase by 11 percent.
The company said sales of its high-end chips for MP3 audio players and wireless phones with cameras are improving. That was a surprise, and the company's shares rose.
Wall Street and Main Street need to see similar upbeat news or third- and fourth-quarter estimates won't hold up, said Brian G. Belski, a market strategist at U.S. Bancorp Piper Jaffray in Minneapolis.
Analysts now forecast third-quarter earnings to grow 13.6 percent and fourth-quarter growth at a hefty 21.6 percent. Companies probably will hit the third-quarter number, but Belski said the fourth-quarter estimate is unrealistic:
"Analysts right now are way too optimistic. Yes, companies are beating revised lowered estimates. But we are not hearing anything about forward growth. And to fuel any kind of dramatic earnings expansion, you need to see sales increase."