Salient to Investors:

Thomson Reuters says analysts expecting a 2.3% profit decline in the S&P 500 in Q3 versus 8.4% year-over-year growth in Q2.

More than 20% of S&P 500 companies have pre-announced results – of which the vast majority offer negative outlooks.

Bank of America Merrill Lynch is cautious on equities near term due to continued downward earnings revisions, the fiscal cliff, and slowing global growth: expects Q3 earnings to be the first year-over-year decline since Q3 2009, and says Q4 expectations are too high

BAML said corporate America has trimmed expenses down to the bone and demand from Europe and China has slowed. BAML said the trend in guidance has stabilized over the past few months and is nowhere near crisis levels.

Over the last ten years, the S&P 500 has risen 80% of the time during the next three months following an upside earnings surprise from Alcoa. Following a downside earnings surprise, the S&P 500 has moved up almost as often as it has moved down over the following three months.

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