Q2 Earnings: Maybe not so bad after all?

Traders work at the Goldman Sachs Group booth on the floor of the New York Stock Exchange.
Peter Foley | Bloomberg | Getty Images

Earnings anxiety picked up considerably three weeks ago with the Brexit vote. The concern was that large multinational corporations would use the "Brexit ate my homework" excuse to argue that there would be greater uncertainty in the second half of the year, and imply that earnings estimates would need to come down.

It's still early — only 11 percent of the S&P 500 has reported as of this morning — but three weeks after the Brexit vote there has been surprisingly little heard about an increase in global volatility. And that is one reason markets have held up so well.

And while second quarter earnings still appear to be negative, the numbers have been improving fast.

All the major U.S. big banks have reported, the largest sector so far to report. 70 percent of those companies have be at earnings estimates. Most importantly, the big banks have all beat estimates handily: Goldman by 24 percent, Bank of America by 10 percent, Citigroup by 13 percent, JPMorgan by 8.5 percent.

Those are bigger beats than normal.

As a result, the second quarter earnings decline for the Financials sector has fallen to down 3.7% today from down 6.0% last week, according to FactSet.

And that has helped the overall earnings for the S&P 500. Last week, second quarter earnings were expected to be down 5.8 percent. Today, they are down 5.4 percent, thanks mostly to better earnings from the big banks.

As for the third quarter, it is still early, but this morning Johnson & Johnson and Lockheed Martin both raised sales and earnings guidance for the full-year.

United Healthcare raised the low end of its guidance.

J&J specifically cited "strong underlying growth across our enterprise." Lockheed cited "exceptional operational and financial results" as the reason for raising guidance.

Third quarter earnings for the whole S&P 500 can go either way they are now — expected to be up 0.2 percent — but the momentum (for the moment) has definitely shifted to the "glass half-full" camp.