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Illustration: Sarah Grillo/Axios

With Q3 earnings season nearly over, investors are applauding, even cheering companies that fall short of expectations or signal next quarter won't be as rosy as previously thought.

Why it matters: Investors' renewed optimism that's pushed stock prices to all-time highs is giving businesses more leeway than in the past.

  • Profits on a per-share basis are still on track to drop 1.2% year-over-year — though, as more reports come in, that figure has improved from initial estimates that had forecast as much as a 3% fall in earnings.
  • “Expectations were low for some of the sectors exposed to the overall economy and trade. Some of those fears have really subsided, creating a good quarter,” James Ragan, an analyst at firm DA Davidson, told the WSJ.

By the numbers: S&P 500 companies reporting fatter profits than analysts expected have seen average share prices pop 2.3% days before and after their report — above the five-year average of 1%, according to FactSet.

  • As for corporations that unexpectedly disappoint, those share prices have fallen an average of 1.5%, less than the 2.6% that stock prices have dropped on average in the past five years when companies missed estimates.

The bottom line: Investors' glee for just-OK earnings is a shift from a year ago. On-edge investors then weren't rewarding the slew of companies that exceeded analysts' profit expectations.

  • Those stocks saw no price change on average, while companies reporting worse news than expected saw an average price decrease of just 3.2% — way above the five-year average price decrease.

What's next: S&P 500 profit estimates have dropped heading into next year. The downgrades, per UBS, are no worse than normal.

What's going on: Analysts scaled back future earnings estimates for 288 of the 461 S&P 500 companies that have reported Q3 results so far.

What they're saying: "The companies report and they lower their guidance. And then the analysts take their estimates a little bit lower from there," Nick Raich, CEO of earnings research firm The Earnings Scout, tells Axios.

  • "So when the companies are set to report, it's a low bar to clear. It's all part of the earnings game."

Go deeper: UBS issues a warning on earnings

Go deeper

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Illustration: Brendan Lynch/Axios

The Capitol attack on Jan. 6 resulted in at least nine physical assaults against journalists and at least five arrests, per the U.S. Press Freedom Tracker's top editor.

Why it matters: President Trump's harsh rhetoric towards the press has empowered leaders abroad and locally in the U.S. to continue to attack press that they don't like.

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Illustration: Annelise Capossela/Axios

Joe Biden's inauguration and the days right after will bring a rat-tat-tat burst of climate policy moves, but keep this in mind amid the splashy pledges: pushing through most of his agenda will be a long, uncertain slog.

Why it matters: Biden's climate plan is far more expansive than anything contemplated under President Obama. But for all the immediate pledges, it will take years to see how far Biden gets.

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Illustration: Sarah Grillo/Axios

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Yes, but: Others are warning that what's expected to be reflation could actually show up as inflation, a much less welcome phenomenon.