U. S. companies reported good results in the third quarter, but the stock index seemed unimpressed.

As of Friday, 86% of the 49 companies in the s & p 500 index had exceeded analysts' expectations. Of course, the earnings season just kicked off last week, but it was the best performance since traceable data began in 1993.

In fact, Wall Street was already optimistic just two days after the earnings season began.

UBS said in a report last week that corporate earnings were "much stronger than we expected." To that end, UBS raised its earnings forecasts for the S & P 500 for all of 2020 and 2021. Before the earnings season, Wall Street on average expected S & P 500 earnings to fall 20.5% from a year earlier.

What about the stock price? Evercore ISI expects earnings growth to help the S & P move towards 3650 in the coming quarters. As of Monday, the S & P 500 closed at 3427.

But the reality is that among the companies that reported results, their shares fell by an average of 2% the next day, and the s & p 500 was lacklustre last week, up just 0.2% a week.

What's going on?

"the worst is not over yet."

One possibility is that the sword of Damocles still hangs above the earnings of the S & P 500. As UBS acknowledges, the earnings results of the S & P 500 depend largely on a series of uncertainties: the timing of the vaccine, the size and timing of a new fiscal stimulus package, and the impact of the US election results on corporate taxes.

Big Wall Street banks, for example, saw their shares fall sharply last week on fears that the worst for bank customers' defaults was not over, although their profits far exceeded analysts' expectations. Wells Fargo & Co fell nearly 10%, Bank of America Corporation and Citigroup Inc fell at least 3.8%, Goldman Sachs Group Group fell 0.6%, only JPMorgan Chase & Co barely recorded an increase.

Yingwei Finance previously pointed out that the company's guidance for the fourth quarter and beyond will be a key to the earnings season. The number of companies providing guidance has increased in the past three months, but more management remains silent. Goldman Sachs Group said the increase in macro uncertainty in the coming months was a valid reason for executives to minimize forward-looking comments.

Another reason is that prices have been factored into market expectations. Expect earnings to drive stock prices up sharply? In fact, share prices have already risen for one round-- the s & p 500 is just 4.5% below its all-time high. So, at a time when market valuations are already too high, the threshold may be too high for the announcement of earnings to push up share prices sharply.

There are not many US stock buyers anymore?

On the basis of these two factors, another possibility can be drawn: there may be few buyers left in the market.

Money managers are buying heavily as US stocks bounce back from the September slump, according to a survey by the National Association of active Investment managers (NAAIM). The NAAIM exposure index, which tracks 200 corporate advisers, fell to a four-month low of 53 per cent in early September, but has since nearly doubled to its second-highest level in two years, 103 per cent.

The latest BofA Merrill Lynch survey of fund managers showed a similar trend, with professional investors reducing their cash holdings to 4.4 per cent of their portfolios this month, the lowest level since US stocks fell into a bear market in March, and a net 27 per cent of respondents increased their holdings, up from 18 per cent in September. Investors are particularly bullish on US stocks, with exposure one standard deviation higher than the historical average.

In addition, data collected by Goldman Sachs Group's main brokerage business unit show that the net leverage ratio, which measures the industry's risk appetite, has risen to its highest level in at least 12 months.

So, at a time when fund managers' bullish exposure has reached unprecedented levels, given the rebound in the S & P 500 and the chaos that could follow the epidemic and the general election, they are not necessarily willing to risk putting more money into U. S. stocks.

Another 91 S & P 500 companies will report results this week. But after Pelosi set a deadline for negotiations on the stimulus package, the importance of the third-quarter earnings season declined.