NEW YORK (CNN/Money) - You know that joke about the parents who try one Christmas to cure one of their sons of his pessimistic tendencies and the other one of his optimism? Lately, investors seem like the pessimistic one.

The pessimist sees the shiny new bicycle his parents have got him, complains that it isn't the right color, the wheels are wrong, it will probably get stolen, he will probably get hurt. Just how investors have responded to the best earnings season in recent memory by selling stock.

Sure, we all know the old saw about selling the news, but if you can't get happy about the way third-quarter earnings are going, what can you get excited about? For the over 300 companies in the S&P that have reported so far, earnings are about 23 percent ahead of where they were last year. There's still plenty of companies left to report, obviously, but analysts' forecast of about 15 percent growth at the beginning of the month seems like a distant memory.

Meanwhile, expectations for the fourth quarter are getting marched higher -- an oddity because next-quarter estimates usually fall during earnings season. Now the analysts think we'll see growth of 22.6 percent earnings in the last three months of the year.

Isn't there a pony in here someplace?

Companies in this report:Procter & Gamble; International Paper; American Express; Verizon; Boeing,Exxon Mobil.

For much of 2003, it seemed the only reaction Procter & Gamble (PG: Research, Estimates) could elicit from investors was a stifled yawn. Sure the big consumer giant, which makes everything from Tide detergent to the Swiffer, has a habit of generating earnings through thick and thin, but that wasn't exactly new news. Nor was the success of the company's restructuring efforts -- if anything, analysts were wondering what the company was going to do for an encore.

Then came Prilosec OTC. In early September Procter & Gamble raised its third-quarter earnings guidance, citing strong initial orders for the new over-the-counter version of Astra Zeneca's heartburn medication. Procter's shares shot higher and, despite a court ruling that the company overhyped Prilosec OTC in its advertising, they've continued to hang higher.

642 802 696 322   382   582   companies reporting:     120   beat expectations:     79   met expections:     20   short expectations:     21   January 24, 2005 Fourth quarter 2004 warnings and surprises to date.

Why it matters: The new Procter & Gamble is lean, has just released a hot new product -- and is far from cheap, trading at much higher multiples than its peer group. Seeing this, other household product companies may decide that they need scuttle their stodgy brands, as Procter & Gamble has done, and get some flashy stuff worked into the mix.

Sounds great, but there are dangers. When you grab for growth, your earnings can get a lot more volatile. For companies whose strong suit with investors has historically been their stability, this could be a problem.

First Call forecast: $1.25 per share versus $1.12 a year earlier.

When they imagine a global economic recovery, many investors see people reading fat magazines, hitting the print button on their computer twice by mistake, putting stuff into boxes. And then they go out and buy International Paper (IP: Research, Estimates).

Which is exactly what they've been doing: The Dow component's been running higher at a decent clip since the spring. But even if the hoped-for recovery really does come, there's a lot of danger here.

Like many other commodity producers, IP has been engaged in a restructuring effort that's begun to look like Boston's Big Dig -- you wonder when it's going to end. The problem: There is still far too much capacity at paper and forest products companies around the world, giving IP little pricing power and pressuring profit margins.

The hope is that when business picks up, all of IP's cost-cutting efforts will pay off. They'll have to, to justify IP's heady valuation.

Why it matters: Commodity producers like IP are old dogs that desperately need to learn new tricks. While in the past they were best served using their cash to expand operations, in a world awash in competition they need instead to keep streamlining operations and upping dividends.

Unfortunately, the siren song of an economic upturn may make it difficult for them to stay the course.

First Call forecast: 25 cents per share versus 32 cents a year earlier.

The country's biggest corporate travel agent and No. 3 credit card issuer was hit hard by the recession and the slowdown in travel following the events of September 11, 2001. But business has been improving and the company has managed to show better-than-forecast earnings and revenue growth in the first half of 2003.

Amex (AXP: Research, Estimates) has done well this year despite the impact of the war in Iraq and the SARS outbreak, due to strength in its credit card business and the rally in the stock market, which helped its investment portfolio.

The third quarter of the year looks to be a good one as well. Standard & Poor's recently upgraded its credit rating on American Express to "stable" from "negative," noting the company's ability to pull through the recession and the slowdown in business travel.

In the year ahead, the company is likely to benefit from a recent federal antitrust ruling against its competitors Visa and MasterCard, which will allow American Express and other smaller rivals to issue credit cards on behalf of banks that already have deals with Visa and MasterCard.

Why it matters: If business and corporate travel is really recovering strongly -- as recent reports would suggest -- it should show up in American Express's bottom line. Such growth in spending, by extension, would also confirm the burgeoning economic recovery.

First Call forecast: 58 cents per share versus 52 cents a year earlier.

Verizon (VZ: Research, Estimates) is probably the strongest company in the telecom sector right now. Then again, that's not saying a whole lot, as the Baby Bell is expected to report revenues that are slightly lower than sales from last year's third quarter. And earnings estimates for the quarter have plunged after Verizon issued a warning for the year in September.

Fellow struggling regional phone companies SBC and BellSouth both reported declines in their core business of local phone service this week as price competition and a sluggish corporate environment continued to take their toll. This may also hurt Verizon.

However, BellSouth was able to offset some of this with strong subscriber growth for long distance and digital subscriber line (DSL) high-speed Internet access services and investors rewarded it for doing so. Verizon may post healthy gains in long distance and DSL customers as well. Plus, the company has the added benefit of Verizon Wireless, the nation's largest cell phone carrier.

Why it matters: Telecom stocks have been in a malaise all year and have completely missed out on Wall Street's big rally. Better-than-expected news from Verizon could stop the bleeding in the sector.

First Call forecast: 62 cents a share versus 77 cents a year ago.

The sluggish market for commercial aircraft has hurt leading supplier Boeing (BA: Research, Estimates) in 2003 enough to jeopardize its No. 1 ranking worldwide.

Commercial jet delivery fell 11 percent in the third quarter from a year ago, Boeing said, which could hurt third-quarter earnings, and while it is on track to meet its earlier delivery forecast for the full year, that won't be sufficient to stave off competitor Airbus. Boeing expects to deliver 280 passenger jets this year, down from 381 in 2002 and 527 in 2001. Airbus says it will deliver 300 jets, overtaking Boeing for the first time ever.

Countering the negativity, Boeing said that the decline in jets it will deliver this year wouldn't stop it from reporting an operating profit for the unit -- significant, as commercial aircraft is its biggest segment.

Last quarter, Boeing reported a steeper-than-expected loss, due to a one-time charge. Looking forward, the company stated that 2003 revenue is on track to meet estimates, but warned that 2004 revenue will miss and that commercial jet orders aren't likely to improve until at least 2005. Very recently, the company said it would shut down its dwindling 757 line by late 2004.

What's helping Boeing is the growth in its military aircraft and missile systems unit, which is expected to keep benefiting from increased U.S. investment in defense over the next decade. The caveat is that a potential multi-billion dollar Air Force tanker order is in jeopardy right now because of questions about the Air Force's accounting methods. Additionally, the Pentagon is investigating Boeing's bidding practices in relation to other deals.

Why it matters: There are signs of a pickup in the airline sector lately, particularly in business travel. If Boeing should say something that supports this, that would be good news for Boeing's competitors, the airline sector and the economic recovery.

First Call forecast: 37 cents per share versus 46 cents a year ago.

Oil companies saw their profits rise sharply in the first half of the year, thanks to higher crude oil and natural gas prices, and a better market for fuel refining.

With commodity prices currently at or near their highs for the year, OPEC recently announcing a cut in its daily oil output, and the winter heating season just getting underway, there's no reason to expect the last quarter or the current one to be much different.

All of which is supportive for profits at Exxon Mobil (XOM: Research, Estimates), the world's biggest oil company. But Exxon's aggressive investments of late -- a multibillion dollar natural gas development deal in Qatar and rumors that it will take a substantial stake in the newly-merged $45 billion dollar Russian oil firm Sibneft -- have raised some eyebrows.

This week, J.P. Morgan downgraded Exxon stock to a "neutral" rating from an "overweight" rating, saying the company is less likely to raise its dividend significantly in the near term and that its valuation is near the upper end of its historical range.

Why it matters: The persistent high level of oil and gas prices continues to burden consumers and slow down the economic recovery. What Exxon says regarding volume and demand for its products will be significant, in that a pickup would suggest that businesses and consumers are spending more.

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Oil company profits have been improving all year, but the stock prices have been stubbornly range bound, with investors wary that the profit growth is unsustainable. Another strong quarter and evidence of more to come might prove sufficient to bring back the buyers.

First Call forecast: 62 cents per share, versus 44 cents a year ago.