The Q4 earnings season ramps up in a big way this week, with 437 companies reporting quarterly results, including 129 S&P 500 members. With results from 73 index members already on the books, we will have seen Q4 results from 40% the S&P 500 members by the end of this week.

Decent reports from some of the large banks notwithstanding, the overall tone emerging from the results that we have seen already shows no improvement from the weak trend that has been in place for some time now. Companies are struggling to achieve growth in the current environment of a slowing global economy, the strong U.S. dollar and persistent problems in the Energy sector.

The net result is that Q4 earnings for the S&P 500 index are on track to be below the year-earlier level – the third quarter in a row of negative earnings growth for the index. Recent weakness in oil and other commodity prices has effectively guaranteed that this negative growth trend will continue into the current and following periods as well. In fact, all of the earnings growth for the S&P 500 index in 2016 are now entirely expected to come in the back half of the year, with growth in the first half of the year now expected to be in the negative.

Q4 Scorecard (as of Friday, January 22nd)

Total earnings for the 73 S&P 500 members that have reported results already are up +1.4% on +0.8% higher revenues, with 71.2% beating EPS estimates and 37% coming ahead of top-line expectations. Please note that these 73 index members account for almost 20% of the index’s total market capitalization.

The table below provides the current Q4 scorecard

For the Finance sector, we now have Q4 results from 47.3% of the sector’s total market cap in the index. Total Finance sector earnings are up +11.7% from the same period last year on +1.2% higher revenues, with 69.2% beating EPS estimates and 42.3% beating revenue estimates. These is better growth and pace of positive surprises for the sector relative to other recent periods, though the strong earnings growth rate is solely due to easy comparisons at Citigroup (C). Excluding Citigroup, the sector’s growth rate drops to +0.6% gain from the year-earlier period.

The charts below provide a comparison of the results thus far with what we have seen from this same group of 73 S&P 500 members in other recent periods.

As you can see, this is weaker performance than we have seen from the same group of companies in other recent periods. Revenue surprises are particularly notable for their weakness.

Q4 As a Whole

The composite (or blended) growth rate for Q4, combining the actual results from the 73 index members that have reported results with estimates for the still-to-come 427 members, shows total earnings declining by -6.6% from the same period last year on -4.6% lower revenues, the third straight quarter of earnings declines for the index.

While Energy remains the big drag, as it has been in other recent quarters, the weakness is broad-based, with 13 of the 16 sectors expected to suffer earnings declines. Total earnings for the Energy sector are expected be down -71.6% on -38.3% lower revenues. Excluding Energy, earnings growth for the S&P 500 would still be in the negative (down -0.9% on -0.1% lower revenues).

The table below provides a summary picture of Q4 expectations contrasted with what was actually achieved in the preceding quarter.

Please note that the growth picture is actually even weaker once Finance’s +11.1% growth in Q4 is adjusted for the easy comparisons at Citigroup. Excluding Citigroup, the Finance sector’s growth drops from +11.1% to +5% and the index’s decline expands from -6.6% to -7.7%.

This Week’s Notable Reports

While there are more than 430 companies coming out with Q4 results this week, including 129 S&P 500 members, the major ones are listed below:

Monday (1/25/16): McDonald’s (MCD - Analyst Report) and Halliburton (HAL - Analyst Report) are among the notable companies reporting in the morning. McDonald’s is expected to earn $1.23 in EPS on $6.23 billion in revenues, which compares to $1.22 on $6.57 billion in revenues in the year-earlier quarter. The stock has been a solid performer lately and estimates have modestly been inching up in recent day; it will be interesting to see if McDonald’s can come up with as strong a positive surprise as it did in its September quarter report.

Tuesday (1/26/16): A busy reporting docket, with more than 70 companies reporting results, including 23 S&P 500 members. While many major companies like Johnson & Johnson (JNJ - Analyst Report), 3M (MMM - Analyst Report), and AT&T (T - Analyst Report) are reporting results today, the focus will be on Apple (AAPL) which reports after the market’s close. The company’s growing reliance on China will be front and center in the report, with market participants trying to size up evidence of meaningful growth deceleration in this key market.

To get a sense of how big of a deal the iPhone maker’s results are, Apple is expected to earn $3.24 in EPS on $76.4 billion in revenues, which will compare to $3.06 on $74.6 billion in revenues in the December 2014 period. In net income terms, the company is expected to earn $17.9 billion in earnings vs. $18 billion in the year-earlier quarter. Please note that Apple’s Q4 earnings tally alone exceeds total expected earnings from 12 of the 16 Zacks sectors.

Wednesday (1/27/16): We have more than 100 companies reporting results this day, including 33 S&P 500 members. Of today’s busy line-up, Boeing (BA) is the key report in the morning and Facebook (FB - Analyst Report) after the close.

Thursday (1/28/16): This is the busiest day of the Q4 earnings season thus far, with 167 companies reporting results, including 51 S&P 500 members. The notable reports today include Caterpillar (CAT - Analyst Report), Eli Lilly (LLY - Analyst Report) and Ford (F - Analyst Report) in the morning, while Amazon (AMZN) and Microsoft (MSFT - Analyst Report) will be reporting after the close.

Friday (1/28/16): MasterCard (MA - Analyst Report) and Chevron (CVX - Analyst Report) are among the notable reports this morning.

Looking Beyond 2015 Q4

While earnings growth was negative in the last three quarters, the outlook for the current and following periods doesn’t look any better. Estimates for 2016 Q1 have started coming down at an accelerated pace, with total earnings for the quarter now expected to be down -3.9% from the same period last year. This is down from the roughly flat growth expected for the period in mid-November. The picture for the following quarter isn’t looking that much better either, as the chart below shows.

A big part of the recent negative revisions reflect developments in the oil patch, but the outlook for the other sector’s aren't that inspiring either, with the uncertain interest rate environment weighing on the earnings outlook for the banking industry.

As you can see in the chart below of quarterly growth expectations, all of this year’s growth is now expected to come from second half of the year, with earnings growth in the first half now expected to be in the negative.

The relatively optimistic looking expectations for the outer periods aren’t unusual – Wall Street analysts always tend to be more optimistic about the future. But estimates start coming down as the period in question comes closer. The erosion of 2015 growth estimates was driven largely by what happened to the Energy sector. But estimates for other sectors came down as well…and we will likely see something similar to current 2016 estimates as well.