Leading up to earnings season, it appears many analysts have made negative revisions on the companies set to report their second-quarter results. But the pessimistic outlook on individual stocks could actually be a good sign for the market as a whole. And as earnings season gets started, corporate reports have largely looked good.
Over the last month, analysts lowered forecasts for 278 more companies than they raised forecasts for in the broad S&P 1500, according to Bespoke Investment Group. And since that presumably makes earnings expectations easier to beat, "it tends to be a good thing," Paul Hickey of Bespoke said Wednesday on CNBC's "Trading Nation."
So far, "the results are definitely coming in better than expected, which was helped by analysts setting the bar low."
The difference in expectations can lead to a big difference in market reaction, according to Bespoke data.