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Halfway through earnings season, here is the one big trend emerging

  • Companies that are disappointing the Street, such as Bristol Myers and Celgene, are getting punished more than they used to.
  • And companies that beat expectations aren't getting the price boost they used to get.
Wall Street, NYSE after hours
Mario Tama | Getty Images

Halfway through earnings season, one big trend is emerging: Heaven help the companies that miss expectations or provide disappointing guidance.

Take Bristol-Myers Squibb. Its shares fell about 4.5 percent on Thursday as the company missed its third-quarter numbers.

And Celgene shares tumbled more than 19 percent Thursday after the biotech fell short on revenue for the quarter and provided disappointing guidance. The stock had already fallen 11 percent on Friday on an announcement it would stop further trials of its Crohn's disease drug.

This has been happening all quarter. The market is heaping more punishment than it used to on stocks of companies that miss expectations, and it is not rewarding stocks of companies that beat as it used to. About 45 percent of S&P 500 companies have reported so far.

According to FactSet, stocks of companies that missed expectations were down on average 3.3 percent in the two days before their reports through two days after. But the five-year average decline is 2.4 percent.

So, companies that are missing this time around are getting punished more than they used to.

And among companies that have beaten expectations, their stocks are up an average of 0.3 percent in the two days before their reports through two days after. The five-year average gain is 1.2 percent.

That means companies that beat aren't getting the price boost they used to get.

Prices and valuations can explain this trend. Prices are simply much higher. Investors have large gains, and they — particularly momentum investors — are much less forgiving.

You can understand their attitude. Not only have prices risen, but valuations are higher. The forward price-to-earnings multiple for the S&P 500 is currently 17.9, according to FactSet, at the high end of the historical range. The five-year average P/E is 15.6. It's not unusual for multiples to expand if the economy is expanding and there is earnings growth, but the market's reaction to this season's misses and beats seems to indicate we may be reaching the upper limits of that multiple.

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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