THE fourth quarter earnings reporting season has so far achieved all that investors could have hoped for, but the good news has all been obscured by a wave of worrisome events from Washington and Beijing and Europe.

'The corporate side of the stock market's fundamental picture has been a true success story in the early going in 2010,' said Nick Colas, chief market strategist at Convergex Group. 'Earnings and revenue growth, cash flow and margins have all been better than solid. No one's worried about Corporate America anymore. But it seems as if no one cares right now,' he added.

On Tuesday, for example, Coca-Cola's net operating revenue rose 5 per cent to US$7.51 billion, beating analyst forecasts. So did Walt Disney, which reported sales and a profit that both topped what analysts were expecting. The same happened at media and entertainment giants News Corp and Time Warner.

Even bearish analysts like Gluskin Scheff's David Rosenberg, have noted the positive corporate story amongst the gloom. 'On a brighter note, balance sheets among large-cap businesses are in good shape. Corporations have a tremendous amount of cash on hand and these balance sheet fundamentals should help establish a firm ceiling on credit spreads.'

But the US stock market's brief recovery on Tuesday, before returning to its downslide on Wednesday, had little to do with those companies' stellar numbers, traders said.

Indeed, share prices of all those stocks actually fell from their pre-announcement levels, while the buying on Wall Street was attributed to relief that the European Union was preparing some sort of a bailout of Greece's credit problems.

On Wednesday, the Dow Industrials lost 0.2 per cent to 10,038, while the S&P 500 fell by a similar amount to 1,068 and the Nasdaq went lower by 0.1 per cent to 2,148.

Investors were awaiting the latest from Europe while sifting through Fed chairman Ben Bernanke's prepared statement to Congress on how the central bank will go about withdrawing its monetary support as the economy stabilises.

It wasn't supposed to be this way for this quarter's earnings. The range-bound stock market was awaiting Corporate America's latest numbers as the key to determining the fundamental picture underlying the economy's fragile recovery from financial chaos, and thus the catalyst to the market's next big move.

As investors all too painfully are aware, that big move in the stock market came, but despite what was exactly the kind of fourth quarter profit season that Wall Street hoped for, the results have hardly been a positive catalyst.

Instead, the market's attention has been riveted on other events since the second week of January. From President Barack Obama's renewed focus on reining in the excesses on Wall Street, to China's move to cool the economy and Greece's debt crisis, the fourth quarter announcements have been buried under a wall of worries.

Major companies have for the most part reported the long awaited growth in top-line growth. But since Jan 19, when the S&P 500 was still up 2 per cent year-to-date, earnings revisions have steadily risen, particularly in revenues where growth is approaching 8 per cent, far above consensus estimates of 5 per cent, while the US equity indices have sunk 7 per cent or worse.

'It's either been the case during the peak earnings reporting weeks of the past four weeks that good news goes largely ignored or else the rampant pessimism and risk-aversion among investors that has dominated the last month has translated into a sell-on-the-news mentality as companies beat expectations,' said Larry Adam, chief market strategist at Deutsche Bank Wealth Management.

Up till last week, 71 per cent of the 313 companies in the S&P 500 Index reporting have beaten analysts' revenue expectations, according to Thomson-Reuters. The estimated earnings growth rate for the S&P 500 for the fourth quarter now stands at 206 per cent, which translates into a forward price-earnings ratio for the S&P 500 of 13.5.

'The bottoms-up target price for the S&P 500 is 1,278.09, which is 20.2 per cent above the Feb 4 closing price of 1,063.11,' observed John Butters, chief research analyst at Thomson Reuters.

The improvement in the top lines led Bank of America-Merrill Lynch's David Bianco to raise 2010 and 2011 S&P 500 EPS estimates to US$75 and US$85 from US$73 and US$83, on Wednesday, noting that the fourth quarter has been impressive on both top-line and bottom-line growth.

Mr Adam, who issued a bullish advisory when stocks pulled back 5.7 per cent during third quarter earnings season, and saw stocks subsequently roar back, with the S&P 500 rising nearly 10 per cent over the next six weeks until the mid-January correction, believes the same thing could happen now.