Updated from 2:41 p.m. ET with information on Alcoa's report, a warning in the semiconductor sector.

NEW YORK ( TheStreet) -- Before the employment picture went dim (again), and European debt contagion fears burst back onto the scene, it seemed Wall Street was pretty bullish about second-quarter earnings season.

Not so much anymore. Slowly but surely, analyst expectations have been coming down. More worrisome perhaps is that warning season was a whopper. According to Thomson Reuters data, 84 companies in the S&P 500 have already issued negative preannouncements about their second-quarter results, roughly 17% of the index, vs. 33 positive preannouncements.

That makes for a 2.6 negative/positive ratio, which Thomson Reuters says compares to ratios of 1.2 and 1.8 for last year's second quarter and 2011's first quarter, respectively.



This is especially concerning because companies theoretically do such a good job of managing expectations these days. More than 70% of companies typically beat the consensus view. This renders the idea that they are really outperforming to a great degree almost meaningless, but it also means that when they miss, they really do miss.

After Monday's closing bell, Microchip Technology ( MCHP) joined the warnings parade. The company made a sizable cut to its expectations for the June-ended quarter, citing "weak global market conditions" that it believes are impacting the whole semiconductor industry and could linger into the September quarter. A slew of chip companies lurched lower in late trades on the news.

In addition to the warnings, the cumulative share-weighted earnings view for the S&P 500 has come down more than 6% in the past month. As of July 9, Wall Street was expecting earnings of $218.3 billion from the S&P 500 for the calendar second quarter, according to Thomson Reuters data. A week ago, the estimate was $222.9 billion, and on April 1, it stood at $229.6 billion.

The bullishness peaked on June 9 when the estimate reached $232.5 billion but it's been down every week since then, even as the market roared back, supposedly in part because of earnings optimism.

The main drags on the numbers have been the financial and consumer discretionary sectors, whose warnings and falling estimates have outpaced increases for the energy and telecommunications sectors.

Alcoa ( AA) kicked things off after Monday's closing bell as the first component of the Dow Jones Industrial Average to report its quarterly results, and the performance was mixed. While revenue came in well ahead of consensus, earnings only met views (and there was some confusion about that) with the company noting higher energy and materials costs in the quarter.

Of more concern to the market are the big banks that will follow later this week and the next.

The fresh uncertainty in Europe, as evidenced by Italy's travails, appears to be the main driver for Monday's sell-off in the financials with the SPDR KBW Bank ETF ( KBE) down 2.5% but there's also some earnings worries mixed in there.

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