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So, you survived the third-quarter earnings season and didn't even get a lousy T-shirt. Instead, you're stuck with losses in your portfolio and questions about where to go from here.

True, the stock market got battered around pretty well during most of earnings season. And yes, the picture might not be as bright as it was this time last year. But, take heart. Things aren't as bad as they seem.

Of the companies that have reported within the

S&P 500 Index so far, nearly 60% topped Wall Street's consensus estimates, approximately 17% have fallen short and the rest have reported on target, according to data from

I/B/E/S

. The third quarter has shown 18.7% year-over-year earnings growth, compared with growth of 23.6% in the first quarter and 21.6% in the second quarter. In short, corporate profits are robust.

Why, then, so much fuss about this past quarter?

To be sure, many of America's best-known stocks gave Wall Street good reason to sweat. As investors remember too well, this earnings season got rolling with a jerk of preannouncements. High-profile companies like

Apple

(AAPL) - Get Apple Inc. Report

,

Dell

(DELL) - Get Dell Technologies Inc Class C Report

and

Intel

(INTC) - Get Intel Corporation Report

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warned that their numbers would disappoint, sending shudders through the Street.

During that confession period, companies blamed everything from surging fuel costs to weakening demand abroad to a slowing economy for their profit woes.

"Things appeared gloom-and-doom," said Joseph Kalinowski, market strategist at I/B/E/S. "But while 80% of preannouncements in any given quarter are typically negative, only 70% in the most recent season were pessimistic."

Earnings Roundup: Highlights and Low Points

The third quarter was a boon for select industries. Energy companies benefited from a 122.1% year-over-year pop, slightly below the past quarter's 184% burst. That sector was perhaps the only one to be fueled by the rise in oil prices.

Elsewhere, defensive industries, such as public utilities and health care, also came out on top. The health care sector showed 19.1% growth, while public utilities demonstrated a 3.5% improvement, I/B/E/S data show.

As always, certain sectors took it more squarely on the chin than others. Decade-high crude oil prices slapped the transport sector with a 4.8% decrease in earnings growth, compared with 6.8% progress in the second quarter, according to I/B/E/S. Among the industries hit hardest by sky-high fuel prices were the airlines. Going forward, research analysts have lowered their earnings estimates for many airlines. The group, as a whole, suffered a 7.7% growth loss, vs. 9.2% expansion in the previous quarter.

Disappointments from Old Economy brands

General Motors

(GM) - Get General Motors Company Report

and

DaimlerChrysler

(DCX)

took some steam out of the auto manufacturing sector, revealing a 24.5% year-over-year earnings contraction.

Third-quarter weakness also manifested in the consumer services sector, where I/B/E/S numbers show that year-over-year growth dropped 3.4%, weighed against a 12.3% increase during the second quarter. A combination of factors contributed to losses in that area.

For one, retail preannouncements took their toll. After

Home Depot

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warned on Oct. 12 that its third-quarter profits would miss estimates, the

S&P Retail Index

fell 7.7% that day. The measure is now down about 5.5% for the year. Additionally, higher interest rates and the risk of a slowdown in consumer spending hurt the group.

Depot Down

More than across-the-board shortfalls, the third quarter was marred with guilt by association.

"Corporate profits were squeezed," said Charles Blood, director of financial markets at

Brown Brothers Harriman

, "but not as badly as the headlines suggest." So often during the third quarter, bad news out of one company spoiled the party for everyone. But believe it or not, even the technology sector -- the most frequent victim of this "domino effect"-- recorded a very impressive 48.2% year-over-year advancement, up slightly from last quarter's 47.4% growth rate, according to I/B/E/S.

Nortel's Revenue Disappoints

Memorably,

Nortel Networks

(NT)

let the air out of the balloon in the optical networking sector, after the company disclosed that third-quarter revenue had failed to meet Wall Street's highest expectations. Since that time, Nortel is down approximately 32%. Technology darlings that fell with Nortel included

Ciena

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,

PMC Sierra

(PMCS)

and

Corning

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.

IBM's Sales Shortfall

Equally unwelcome were earnings shortfalls in the PC sector. The recap:

IBM

(IBM) - Get International Business Machines Corporation Report

reported third-quarter earnings that met expectations, but its sales fell below analysts' forecasts. Apple reported fourth-quarter earnings that fell below reduced forecasts.

On the contrary,

Gateway

(GTW)

rewarded investors with a solid earnings report. On the whole, computer manufacturers reported year-over-year earnings growth of 40.9%, up from last quarter's 33.4% growth, I/B/E/S research reveals.

The Blame Game

So, what happened to the market? Some experts think the

Securities & Exchange Commission's

new

Regulation FD

policy, designed to promote fair disclosure of company information to all investors, affected third-quarter earnings.

"Previously, companies had been successful in guiding down before earnings season began," noted Tom McManus, equity portfolio strategist at

Banc of America Securities

. "This time around, more companies entered the season with disappointing news up their sleeves than the market had been accustomed to in the past."

The Macro-Reality

Perhaps the best perspective is an economic one.

"The big macroeconomic factors of the quarter were the rise in energy costs and the dollar's renewed strength," said Steven Wieting, a senior economist at

Salomon Smith Barney

.

Wieting realizes the market impact of the energy shock, especially for consumer staples and capital goods, but is confident things will improve. "The hit that oil had on consumers' and businesses' wallets in the past quarter was huge, and we will carry a heavy burden through the winter. But it won't last forever." As for the euro, he expects the effect on international growth to be longer term than the oil problem but have less impact. Still, corporate growth may be flattened because of the rising costs of goods for Europeans.

What's more, last week the

National Association of Business Economists

warned of a sharp profit squeeze and a slower rate of capital spending. "Our survey hints that the business outlook is becoming more difficult," cautioned NABE president Richard Berner. "Courtesy of higher energy product prices, the effects of past

Fed tightening and a stronger dollar, companies are seeing the most intense squeeze on profit margins in nine years."

Yesterday, the

consumer confidence index

dropped to its lowest level in a year, due to concerns about oil and stock market volatility. "Consumer spending, which has been overextended, is slowing," noted Wieting. "It's not going to be the brightest Christmas for consumers."

On Oct. 27, investors received confirmation that the economy is in fact slowing. At 2.7%, the initial

gross domestic product

estimate was pretty low. After all, the average rate from 1995 to 1999 was 4% and forecasts were for 3.4%.

Some experts on Wall Street are more concerned than others about economic deceleration. "The economy was growing at a very fast clip and we're now shifting into a slower growth environment," remarked Josh Feinman, chief economist at

Deutsche Asset Management Americas

. "By standards of five years ago, 3% growth is OK. Over the past few years, we raised the bar. Now, we're adjusting downward, and it doesn't feel so good. The Fed's tightening is still feeding into the economy. We're lowering valuations, in fits and starts, and allowing the economy to catch up."

Fourth Quarter: Back to the Future

For the final quarter of this year, I/B/E/S predicts 10.8% earnings growth. "I think the third quarter is a good sample of what we'll see in the fourth," noted Blood. "The third quarter was mixed, somewhat disappointing, but not a disaster." According to I/B/E/S, earnings growth is expected to come in at 17% for 2000 and 11% for 2001.

"We're reverting back to normal trends," concluded Kalinowski. "We're not going to continue to see 20% earnings growth every quarter. We're going back to normal growth."

Bottom line: The sky is not falling. "We had picture-perfect skies," remarked Feinman. "Now, we have a few clouds. Bring a sweater. It's not going to be a downpour."