Over three quarters of fourth quarter earnings reports are in, and the earnings results have largely beaten expectations, but what lies ahead isn't as straightforward. 

Roughly 80% of S&P 500 companies have reported earnings according to data from FactSet. So far, the average earnings growth rate year-over-year for the fourth quarter is 13.1%, beating expectations of 10.9%, which was revised downward from 12% in early December. The downward revisions come as many economists and strategists see weakening global growth in the U.S., Eurozone, and China. 

Perhaps more importantly, 59 S&P 500 companies have revised earnings guidance downward, while only 19 have revised guidance upward. Meanwhile, the S&P 500 is up 10.88% year-to-date, while many Wall Street strategists are calling for gains on the index of between 9% and 15%. Earnings growth for the first quarter is expected decline by 2.2%, a steeper decline than the 1.7% decline expected in January. 

Two sectors have performed particularly well for the fourth quarter; industrials and consumer discretinoaries. 

Industrials 

Roughly 85% of industrials that have reported fourth-quarter earnings beat expectations, according to FactSet. The Dow Jones Industrial Average is up 11.07% on the year.

Some top wealth managers are now getting cautious on industrials.

"Our allocation at this point to industrials would be neutral, given the run-up," People's United Advisors' head of asset allocation Albert Brenner told TheStreet. Others are cautious on the sector as well. "It's not going to be the sector where there's this rising tide that lifts all boats," Amanda Agati, co-chief investment strategist at PNC Financial. 

Some industrials have shown investors a lot to applaud, while others have not. "It's a stock pickers story in industrials," Agati said, adding "stock picking matters again. Brenner agrees, saying "investors are going to find the most benefit by being the most discretionary in their stock purchases," adding that "there's no question about it," that choosing active fund management is a good move at this juncture. 

For example, two industrial behemoths, Caterpillar Inc. (CAT) and Boeing co. (BA) went in opposite directions on their earnings reports. 

Caterpillar Inc. missed earnings estimates by roughly 15% in late January. That sent chills down the spines of investors. All three major indices tumbled that day, as it seemed demand for capital goods is slowing significantly. Looking forward, Caterpillar said it expects flat growth in capital expenditures for the full year of 2019. "What's really interesting Caterpillar is that they actually called for flat cap-ex -- not good news to see a deceleration in cap-ex growth," Agati said. 

Meanwhile, Boeing Co., another highly cyclical industrial -- albeit not connected to Caterpillar -- beat fourth-quarter estimates and issued encouraging guidance. Boeing beat earnings estimates by almost 20%. Its more-than-satisfactory full-year 2019 guidance was supported by a huge backlog of aircraft orders, setting the company up nicely for the future. The backlog of 5,900 planes is valued at more than $400 billion. 

Plus, space exploration programs are in high demand from the U.S. government right now. Many on Wall Street have said of late that the aerospace segment is helping companies like Boeing establish themselves for the near future. "Even though we think we're in the later innings of the business cycle, we don't think we're in the later innings of the aerospace and defense cycle," Agati said. 

The macro backdrop that's creating a need for active management right now, is that there have been mixed economic signals. "We have this odd economic cycle where people aren't quite sure where [we] are in it," Brenner said. 

Consumer Discretionaries

Consumer Discretionaries have also been a major part of the solid fourth quarter for the U.S. this year. Companies in the sector on average had beaten earnings expectations by 6% in the quarter, a of February 1. That was the second largest gap out of any sector, according to FactSet. 

In food and drink, Starbucks Corp. (SBUX) beat earnings estimates, as earnings-per-share came in at 75 cents on an adjusted basis, beating estimates of an adjusted 65 cents a share, on the back of 4% comparable sales growth in the U.S., which beat estimates. Chipotle Mexican Grill Inc. (CMG) also beat estimates, as did McDonald's Corp. (MCD) , on the back of a global comparable sales beat of 4.4%. 

But the outlook for consumer spending for the next few years has gotten bleaker, leaving room for caution. "Until we see the consumer bounce back, we;d be cautious on consumer discretionary," Brenner said. 

But for the immediate term, many say the consumer is strong, which could bode well for the many clothing retailers still to report earnings. "We're seeing flow through on the fourth quarter for healthy macro and consumer spending," John D. Morris, senior brand apparel analyst at Davidson & Co. told TheStreet. 

Burlington Stores Inc. (BURL)  TJX Companies Inc. (TJX) , Ross Stores Inc. (ROST) , and Kohl's Corp. (KSS) are all still to report fourth quarter earnings. Not only did Morris mention that he expects strong quarters from these names, but if the economy continues to decelerate, that could bode well for discount retailers like these. "If we do go through a slowdown in consumer spending, they should benefit from a downshift because of the kind of values they offer." 

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