NEW YORK (CNN/Money) - To call the third quarter a "Cruel Summer" for stocks is too kind. Forget that bubbly Bananarama ditty. A more apt musical description is "Dirty Black Summer" by heavy metal band Danzig.

The Dow and S&P 500 both fell about 18 percent in the quarter and the Nasdaq posted a nearly 20 percent drop, adding to already hefty year-to-date losses. And on Wednesday the market gave back more than half of Tuesday's huge gains.

Unfortunately, the outlook for autumn and winter is still shaky. A slew of companies will report their third-quarter results in October and earnings estimates keep getting lower as more companies warn.

Chuck Hill of First Call said a gradual economic recovery has contributed to a wide disparity in analysts profit growth expectations and reality. Play video (QuickTime, Real or Windows Media)

To that end, Dow Chemical shocked Wall Street Wednesday by saying that third-quarter earnings would be only about 16 cents a share. The consensus estimate was 29 cents. And after the closing bell, semiconductor manufacturer Advanced Micro Devices disclosed that third-quarter revenue would be $114 million lower than expected and that it would report a "substantial" loss. Analysts already were predicting a loss of 49 cents per share before the warning.

Analysts now expect year-to-year earnings growth of 7 percent for the S&P 500 in the third quarter. "At least it's not an earnings decline," the wide-eyed optimists might say. But back when the third quarter began on July 1, analysts were expecting earnings growth of 16.6 percent.

It's hard to find anything positive about earnings growth projections being more than cut in half in a span of three months.

Sectors that depend on healthy levels of corporate spending have been hit hardest. Earnings growth for the technology sector is expected to be about 35 percent, compared to 81 percent in July. Analysts are predicting earnings growth of 13 percent for basic materials companies, down from 27 percent. And industrials are now expected to post a 5 percent decline in earnings, as opposed to a 2 percent increase.

The Incredible Shrinking Earnings Estimate! For most sectors, the projected earnings growth rates for the third quarter have come down sharply since July. Sector  3Q EPS Gr Est as of 7/1  3Q EPS Gr Est as of 10/3  Basic Materials (e.g. paper, aluminum)  27%  7%  Consumer cyclicals (e.g. retailers, autos)  22%  23%  Consumer staples (e.g. food, beverages)  8%  4%  Financials  39%  28%  Healthcare  7%  1%  Industrials  2%  -7%  Technology  81%  29%     Source:  FirstCall

In fact, earnings estimates have been reduced for every market sector except consumer cyclicals, which includes retailers. Analysts currently are expecting earnings growth of 24 percent, up from 22 percent on July 1. But even that number is not as good as it appears.

Chuck Hill, director of research for earnings tracking firm First Call, says the only reasons for the earnings estimate increase in consumer cyclicals are continued strength in the homebuilding segment as well as in automobiles. But outside of houses and cars, the consumer has started to hold back a bit. (For more about consumer spending, click here)

And due to warnings throughout the retail sector in the past month, analysts have trimmed their estimates for consumer cyclicals in the fourth quarter. "That's an ominous sign," Hill says.

Overall for the fourth quarter, analysts are predicting earnings growth of 20.6 percent for the S&P 500. That's down from 27 percent in July. And Hill thinks estimates still are too high. He expects earnings growth of about 15 percent in the fourth quarter.

To be sure, a 15 percent increase in earnings is a welcome improvement over what's expected in the third quarter, not to mention the anemic 1.4 percent growth rate in the second quarter. But earlier in the year many analysts thought earnings growth for the third quarter and fourth quarter would be substantially higher due to easy comparisons to the dismal second half of last year. In April, analysts were predicting a 31 percent jump in earnings for the fourth quarter.

Barring a quick, miraculous recovery in corporate spending, that probably won't pan out. "Estimates for the rest of this year are probably unachievable," says Dan Bandi, director of value equity investment for National City Investment Management.

And if companies give a gloomy outlook for the rest of the year when they report their third quarter numbers, Hill says, analysts might have to slash the earnings growth projection for 2003 as well. The current consensus estimate for the S&P 500 is 18 percent.

John Lynch, chief market analyst for mutual fund company Evergreen Investments, says that analysts' forecasts are too aggressive, mainly because there still is no clear picture of when businesses will start spending again. He expects earnings growth for the S&P 500 to be about 8 percent in 2003 and that earnings could increase in the high single digit range for the next few years, in line with historical averages.

A return to normalcy after the extreme highs of the 1990s and extreme lows of the past few years would be helpful for the market in the long-term, Lynch says. Problem is that investors still might not have come to the realization that the days of consistent earnings gains in the mid-teens are history.

There's also the fact that companies that had been holding up during the economic downturn finally have started to show signs of weakness as well. For example, drug store chain Walgreen missed earnings expectations by a penny on Monday and its stock fell more than 9 percent. "People were disappointed that maybe Walgreen was not a great place to hide after all," Bandi says.

So with an increased likelihood of more earnings estimate cuts across the board in the near future, in addition to concerns about accounting fraud and Iraq, the next few months look tough for the market. In other words, investors might need to brace -- to borrow a title from Cinderella, another metal band of yesteryear -- for a "Long Cold Winter."