With three out of five major companies missing their revenue forecasts this quarter, a lot of fingers are pointed straight at Europe.
"When you have over half the revenues on the S&P 500 companies coming from overseas, you need stability in Europe and some better growth in China," said Scott Wren, senior equity strategist at Wells Fargo Advisors.
Firms across different sectors are blaming weakness and uncertainty on Europe. On Wednesday, for instance, automaker Ford posted higher-than-expected earnings but reported a $462 million loss in Europe. The company expects to lose $2 billion in Europe this year.
Home appliances maker Whirlpool also posted better-than-expected earnings and stood by its 2013 outlook, but saw a decline in sales in Europe. Container-glass products company Owens-Illinois said profit slumped 32 percent as it was hurt by weaker sales, particularly in Europe.
So far, just over one-third of S&P 500 companies have posted quarterly results, with 68 percent of firms exceeding Wall Street expectations for earnings per share. But just a paltry 40 percent have topped their revenue forecasts, significantly lower than the average 62 percent beat rate, according to the latest data from Thomson Reuters.
The earnings growth rate is coming in much better than expected, now at 3.1 percent from a forecast of about half that. Meanwhile, revenue growth weakened further to 0.5 percent, according to Thomson Reuters.
(Read More: Earnings: Choppy, but Mostly Good)
"Companies continue to have an unrelenting focus on being efficient," said Matt Kaufler, portfolio manager of the Federated Clover Fund. "It will continue to be a tough revenue environment for the next quarter, and earnings expectation for the year will be pulled in a bit."
Financials and telecom sectors are anticipated to post the strongest earnings growth in the first quarter, while energy and techs are the biggest laggards.
Several major technology companies posted results this week, with largely mixed results.
Widely watched Apple posted top and bottom lines that exceeded Wall Street expectations. The iPhone maker also increased its share-repurchase program to $60 billion and hiked its dividend by 15 percent. Still, analysts turned sour on the company amid worries about slower growth and lower margins. At least 11 brokerages slashed their price target on the tech giant.
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Zynga posted earnings that topped expectations, but the social gaming company handed in a disappointing outlook and said the number of people playing its online games dropped dramatically in the first quarter.
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Meanwhile, according to S&P Capital IQ, of the 35 companies that have so far provided second-quarter guidance, the negative-to-positive ratio is 7-to-1, an improvement from last week's 14-to-1 comparison but still sharply lower than the average 2-to-1.
"There's a lot of uncertainty out there, and no one wants to walk the plank and be overly optimistic," said Wren at Well Fargo. "There are still lots of businesses that are uncertain about the regulatory environment and the economic recovery. These companies are going to hire only when they need to, so the employment rate is going to stay higher."
"Keep in mind that the probability of a big upside or downside earnings surprise relative to expectations is quite small," said Wren, adding that earnings season won't be a big deal for the stock market.
"Sure, individual company stock prices will be volatile, as always, in the wake of their earnings releases. … But as the rebound in the major averages from last week's lows show, investors are paying more attention to macro issues like valuations and global central bank monetary policies," he said.