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Photo: Fabrice Coffrini/AFP via Getty Images

Investors have cheered largely better-than-expected company earnings in the third quarter, but those beats are masking an ugly truth, UBS investment bank equity strategists wrote in a note to clients Tuesday.

The big picture: "There is NO debate on S&P 500 forward earnings: a contraction appears imminent."

  • "Indeed, earnings expectations are already contracting in the S&P 400 Midcap and S&P 600 Smallcap indices. Meanwhile, forward earnings growth has slowed from a peak year-over-year growth rate of 23% in September of 2018 to less than 1% today."

Between the lines: There were only 68 companies in the S&P 500 with negative forward earnings at the beginning of the year but today 164 companies are predicting lower earnings — almost a third of the companies in the index.

  • "The most troubling part of all this is that it appears unlikely that the earnings picture will improve anytime soon."

Go deeper: The S&P 500 shuffle

Editor's note: This piece was clarified to show the equity strategists were from UBS investment bank (not UBS).

Go deeper

Woman who allegedly stole laptop from Pelosi's office to sell to Russia is arrested

Photo: FBI

A woman accused of breaching the Capitol and planning to sell to Russia a laptop or hard drive she allegedly stole from Speaker Nancy Pelosi's office was arrested in Pennsylvania's Middle District Monday, the Department of Justice said.

Driving the news: Riley June Williams, 22, is charged with illegally entering the Capitol as well as violent entry and disorderly conduct. She has not been charged over the laptop allegation and the case remains under investigation, per the DOJ.

Biden will reverse Trump's attempt to lift COVID-related travel restrictions

Photo: Tasos Katopodis via Getty

The incoming Biden administration will reverse President Trump's last-minute order to lift COVID-19 related travel restrictions, Jen Psaki, the incoming White House press secretary, tweeted.

Why it matters: President Trump ordered entry bans lifted for travelers from the U.K., Ireland, Brazil and much of Europe to go into effect Jan. 26, but the Biden administration will "strengthen public health measures around international travel in order to further mitigate the spread of COVID-19," Jen Psaki said. Biden will be inaugurated on Wednesday, Jan. 20 and Trump will no longer be president by the time the order is set to go into effect.

Dominion sends cease and desist letter to My Pillow CEO Mike Lindell

Photo: Stephen Maturen/Getty Images

Dominion Voting Systems on Monday sent a cease and desist letter to My Pillow CEO Mike Lindell over his spread of misinformation related to the 2020 election.

Why it matters: Trump and several of his allies have pushed false conspiracy theories about the company, leading Dominion to take legal action. It's suing pro-Trump lawyer Sidney Powell for defamation and $1.3 billion in damages, and a Dominion employee has sued Trump himself, OANN and Newsmax.