NEW YORK (CNN/Money) - The fog of war has hugely distracted Wall Streeters from the things they usually care about. Many of them, for instance, have no idea that Julia DeMato was booted off of "American Idol" Wednesday night. Nor have they thought much about what earnings for the first quarter will look like.

The levity provided by solid family programs like "Idol" might be a welcome respite in these times of worry, but earnings, alas, don't look like they'll give much cause for cheer.

With most companies wrapping up their quarters Monday, earnings estimates have come down substantially. At the beginning of the year analysts' expectations were for first-quarter S&P 500 company earnings to be up 11.7 percent from the year-earlier period. Now these expectations have dropped to 8.3 percent, and they may need to drop further.

"Estimates have to come down," said Salomon Smith Barney economist Steven Wieting. "We're in for an ugly preannouncement season."

Ch-ch-ch-ch-changes First quarter growth estimates have come down for most sectors. Sector Jan. 1 Feb. 1 Mar. 26 Communication Services 10% 3% 1% Consumer Cyclicals 13% 15% 9% Consumer Staples 6% 3% 1% Energy 90% 106% 168% Financials 7% 5% 6% Health Care 8% 6% 4% Industrials 2% -6% -10% Materials 58% 33% -6% Technology 16% 3% 1% Transports 99% -77% -12% Utilities -16% -19% -26% Total S&P 500 11.7% 8.8% 8.3% Source: First Call

The economy continued to limp in the first quarter as uncertainty over war and rising energy prices stifled spending. Most economists, who had expected the first quarter to show a pickup in growth, ratcheted down their expectations as the quarter progressed and are now expecting growth of less than 2 percent -- not much of an improvement over the fourth quarter's 1.4 percent. Within that context, it is hard to imagine much profit growth at all. Although earnings will certainly be better than 2002's abysmal first quarter, they look to show very little sequential improvement over the fourth quarter.

Furthermore, points out First Call analyst Ken Perkins, energy company profits make for nearly all of the expected improvement over last year. Thanks to a big jump in oil prices, earnings for the S&P 500 energy sector are expected to grow by 168 percent. Take the energy sector earnings away, and first-quarter S&P 500 earnings look to be up only 1.8 percent from a year ago -- not even keeping up with inflation.

The market may, however, be more forgiving than usual to companies for their lousy earnings. The idea that the uncertainty bred by war has led to businesses and consumers putting off spending plans, and that profits will come back once the war is over, is not a hard one to push. Even companies that warn may find their stocks get treated lightly, given the way traders seem more interested in trading on the war than anything else.

"These are great conditions for companies to guide lower in," said Ehrenkrantz King Nussbaum chief market strategist Ozan Akcin.

The real worry is not so much the earnings picture for the current quarter, but the quarters to come. As has been the case for much of the bear market, analysts expect that while the near-term outlook is not good, further out earnings will be growing strongly. So far, that has been a recipe for disaster.

For the second quarter, Wall Street company analysts think that S&P 500 earnings will be up 7.1 percent over last year. For the third quarter, that growth climbs to 13.2 percent. For the fourth, it's up to 21.3 percent.

These estimates are predicated on a sharp rise in business activity in the second half of the year -- a notion fueled, in part, by the sense that the war will be long resolved and that President Bush will be able to push much of his economic stimulus plan through Congress. But the Bush stimulus plan has run into problems -- Tuesday, the Senate decided to cut the size of Bush's tax-cut plan to $350 billion, less than half the $726 billion Bush proposed. And the possibility that the war could last months, not weeks, means that consumers and businesses could be deferring all those spending plans by more than Wall Street thinks.

"If the war does drag along, analysts are going to have to incorporate that into their numbers," said Ackin.