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AIG Aside, Market Struggles Over Earnings

While AIG is dominating trader talk today, there is also a broader debate going on regarding earnings. In general, the markets are having a tough time moving forward (ex-financials) because earnings for the major sectors keep getting hit, for various reasons. Consider:

1) financials: event risk has taken down ests. on all the big names

2) autos, housing, retail: estimates coming down due to poor fundamentals (jobs, wage growth)

3) energy: was a big contributor to Q3 and Q4 estimates, but are now getting cut because energy prices are dropping

4) tech, industrials, materials: estimates getting cut due to slower global growth.

What's left? Consumer staples and healthcare--the classic defensive names. That's why stocks like Procter and Gamblehave been outperforming recently.

Bears are even more aggressive when arguing about the overall estimates, arguing they are not coming down far enough into the first half of 2009.

For example, right now the S&P 500 trades at a P/E multiple of 15.2; that is about the historic average. Average earnings when earnings risk is above average, they argue, is not a good formula.

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New from CNBC.com:

- The Dow 30 at a Glance

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CNBC's Names in the News:

AIG

Goldman Sachs

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Questions? Comments? tradertalk@cnbc.com