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The once dismal outlook for third-quarter earnings is improving, albeit slowly.
Earnings from most companies that have reported so far have topped analysts' estimates. Among the latest on Thursday were insurer Travelers and investment bank Morgan Stanley .
For all Standard & Poor's 500 companies, 65 percent have beaten analysts' profit estimates, besting the long-term average of 62 percent.
But by the end of the reporting season, earnings of S&P 500 companies are expected to decline overall from a year ago for the first time in three years.
Analysts see corporate profits falling 1.5 percent, which is an improvement from last week when they estimated a 3 percent decline, Thomson Reuters data showed.
"It's not surprising that so many companies are beating their lowered guidance," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.
The main factor behind the quarter's weaker performance is the impact of the slowdown in growth in Europe and China and the sluggish U.S. economy.
For the third quarter the percentage of companies beating revenue forecasts is lower than average.
Just 42 percent of companies so far beat sales expectations. That's below the 62 percent long-term average for an entire reporting period, based on Thomson Reuters data.
Google surprised Wall Street on Thursday with significantly lower-than-expected revenues and earnings.
It's still early in the reporting period, with 97 of the S&P 500 companies having released results, although more than 30 percent of the financial sector has reported.
Seventy-six percent of S&P 500 financials so far have beaten earnings expectations, which has helped overall S&P 500 expectations.
Morgan Stanley was the latest major financial company to post better-than-expected earnings, although as has been the case with other big banks, its shares fell following the news.
"It's interesting because the earnings have topped estimates, but then you look at what they reported, and both Bank of America and Citi had major drops because of writeoffs or restructuring charges, and I'm thinking this is very much a mixed message," said Fred Dickson, chief market strategist, D.A. Davidson & Co. Lake Oswego, Oregon.
Citigroup and Bank of America reported earlier this week.
Also within the financial sector, property insurer Travelers reported a record operating profits in the third quarter, citing high prices and a sharp decline in losses from natural disasters.
Companies continue to warn about future quarters, however, including medical device maker Boston Scientific, which reported a quarterly net loss and warned of weakness in the fourth quarter.
Earlier in the week, International Business Machines and Intel posted disappointing results, adding to worries that the tech sector earnings are losing steam. The tech sector is expected to be among the most affected by the slowdown in China.
That could put more pressure on Apple, which has the biggest influence of any company on S&P 500 results. Without Apple, S&P 500 earnings are expected to decline 2.3 percent, according to Thomson Reuters data. Apple reports next week.