MINNEAPOLIS ( Stockpickr) -- We are seeing stocks move smartly higher this week thanks to an easing of fears regarding Greece and the eurozone. While default remains on the table, an unexpected and disorganized collapse is less likely given the support of France and Germany. Thursday marked the fourth straight day of gains, and stocks are on the rise again today.
The market hates surprises. So even though the situation in the eurozone remains more or less the same, investors cheered the semblance of a plan to deal with things in a stable manner. The action this week puts economic concerns on the back burner. Nothing in the data released this week suggests that we are out of the woods with respect to a double-dip recession.
For anyone interested in fundamentals, there are cracks beginning to appear in the form of reduced earnings estimates for the S&P 500. On Monday, Barclays and Wells Fargo cut their forecasts for the index, citing economic uncertainty; a Wells Fargo analyst reduced her year-end price target on the index by 10% and aggregate earnings for 2012 by 5%.
Related: 5 Loser Stocks Poised for ReboundsThe winds of slower growth have been blowing for some time. It is only now that we face a reckoning with respect to the impact on earnings performance. Thus far, earnings have been on a roll. What is unclear is how things will transpire in 2012. One of the reasons stocks have declined since the middle of July is an expectation of smaller profits. Wall Street analysts, always attempting to endear themselves to management, have been reluctant to reduce company estimates on a micro level. The reduction in expectations for the S&P 500 index is only the beginning. The next phase will be companies reducing guidance and expectations for the remainder of this year and next. On Wednesday, Textron (TXT - Get Report) lowered its profit guidance for 2011 earnings. Expect to see more of these announcements as the third quarter comes to a close at the end of September. The Wells Fargo analyst is suggesting that investors be underweight industrial, energy and material companies. Here are five S&P 500 stocks likely to be hit by lowered estimates that investors should sell or avoid.