What earnings season is saying about road ahead

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As corporate earnings season passes the halfway point, results have been good enough but not particularly good, signaling that a hoped-for strong surge in the second half could be elusive.

In fact, were it not for a robust financial sector, profit on the S&P 500 would be tracking negative 1.6 percent, according to Bank of America Merrill Lynch consensus estimates.

That two-thirds of companies are beating estimates seems almost beside the point: The Wall Street view had gotten so low ahead of the reporting season that anything fogging the mirror would have been an upside surprise.

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Instead, investors have been left to sort through the numbers to find companies that stand out.

"The trajectory of estimates had been sharply negative leading into the reporting season, enabling companies to beat a lowered bar," Adam Parker, chief market strategist at Morgan Stanley, said in an earnings analysis. "Nevertheless, fundamentals appear to be in focus as the market is differentiating between companies, with misses being punished and beats being rewarded."

The earnings scorecard shows nearly 300 companies on the S&P 500 reporting, with 66 percent topping Wall Street expectations.

However, just four of the index's 10 sectors are seeing earnings growth, with financials boasting a whopping 24.7 percent increase and materials showing an ugly 11.7 percent loss. Of the six positive sectors, industrials are barely above water and healthcare is tracking at less than a 2 percent increase, according to S&P Capital IQ.

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Actual revenue growth has been even less attractive.

Sales have grown just 1.7 percent on an annualized basis, though about 56 percent of companies are beating expectations. Excluding financials, the revenue gain is just 1.2 percent.

The outlook is not particularly encouraging, either.

Of the 54 companies that had provided guidance through Friday, 20 were negative, 14 positive and 11 in-line—particularly troubling considering that current expectations are for 4.9 percent third-quarter growth and 10.8 percent in the fourth quarter.

Overall, earnings per share for the entire index have risen to $27.13, 1 percent higher than projections at the start of the season.

Companies that have beaten on both earnings and sales are outperforming the S&P 500 by 2.3 percentage points in the five days after reporting, BofAML said. Companies missing on both have under-performed by 5 percentage points in the five days after and by 8.4 percentage points since the beginning of earnings season.

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Conventional wisdom, though, that investors would focus more on sales than profits has not necessarily held up.

"Earnings may be more of a focus than sales, as performance spreads generated by earnings beats and misses have been more pronounced than those based on top-line surprises," Savita Subramanian, equity and quant strategist at BofAML, said in a note.

One telling factor about investor psychology is that earnings misses have been punished far more than beats have been rewarded, likely in reaction to a failure to beat such modest expectations.

Companies that have fallen short of the Street view have fallen an average 2.56 percent on their reporting day, Bespoke Investment Group said, while those that have beaten gained just 1.34 percent.

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One interesting bit of trivia: Information technology has shown a 6.1 percent decrease in earnings yet has the highest beat rate at 71.3 percent.

So while the market's path of least resistance has been clearly higher, a messy earnings season has given investors some discomfiting things to mull.

"Consumer discretionary and technology stocks that have missed estimates have gotten crushed," Bespoke said in a report. "Investors were clearly expecting a lot out of these sectors heading into earnings season, and companies that have not lived up to expectations have been taken to the woodshed."

By CNBC's Jeff Cox. Follow him @JeffCoxCNBCcom on Twitter.