This is arguably the most important week for earnings because Alphabet, Microsoft, Meta, Apple and Amazon all report. There are three keys to understanding earnings this quarter: 1. S & P earnings are lower but, thanks to another quarter of large profits from Energy companies, overall profits have remained positive. S & P 500 earnings: lower but still positive Q3: +3.1% ex-Energy: - 3.5% Q4: +4.4% Source: Refinitiv 2. Most companies are continuing to beat estimates by a comfortable margin, though at slightly lower rate than we have seen in the past four quarters. About three out of four companies are beating estimates, by an average 5.4%, which is strong but slightly lower than the past four quarters, which were unusually strong. Q3 earnings so far (20% reporting) Beat: 74.7% Last 4 quarters: 78.1% Average beat: 5.4% Last 4 quarters avg beat: 7% Source: Refinitiv 3. Earnings estimates for the growth sectors of Technology and Communication Services have already been cut and are in negative territory. Technology earnings estimates Q3: - 3.4% Q4: - 1.0% Communication Services: Q3: - 15.5% Q4: - 11.4% The Big Five tech companies have all seen earnings estimates trends moving downward for the third and fourth quarter, substantially in the case of Meta and Amazon. Big cap tech earnings Q3 earnings trends (decline in estimates since 6/30) Microsoft: - 8% Apple: - 2% Alphabet: - 10% Meta: - 30% Amazon: - 40% The bottom line: a lot of bad news is already priced into some of the largest tech stocks.