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Third Quarter Earnings Growth Expectations

The third quarter earnings season begins in a couple of weeks, and as of now, S&P 500 earnings are expected to actually decline versus the third quarter of 2011.  This wasn't the case when the third quarter began.  

Below is a chart showing the bottoms-up Q3 earnings growth (YoY) estimate for the S&P 500 as calculated by Bloomberg on a weekly basis.  As shown, at the start of the third quarter, earnings for the S&P were expected to grow at 3.8% in Q3.  Estimates dropped quickly throughout July, however, as companies releasing their Q2 numbers lowered guidance pretty significantly.  As of last Friday, Q3 earnings were expected to decline 2% versus a year ago.

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