Now that 195 companies, representing 49.9 percent of the S&P 500 (INDEXSP:.INX) by market cap, are reporting their Q2 earnings, non-financials have beaten consensus earnings estimates by 1.1 percent. A full 69 percent of non-financials have beaten EPS estimates, and as a whole they have beaten revenue estimates by 0.3 percent.

S&P 500’s improved numbers

The numbers improve when you include financials in the mix, with companies beating consensus earnings predictions by 3.7 percent and revenue predictions by 0.6 percent, reports Julian Emanuel and Kelly Sofka of UBS Investment Research.

While a list of outperforming companies is welcome news for the economy, this is actually a drop from the last three years. The ‘earnings surprise,’ the percentage by which the S&P 500 (INDEXSP:.INX) beats market consensus, has stayed high and positive since the crisis hit. Of course that doesn’t mean the market itself has performed well, but that consensus has been consistently more bearish than it ought to have been, but might now be getting its predictions more in line with results.

S&P Q2 Earnings Surprise

QE tapering introduces short term concerns

On the other hand, plenty of analysts think the current environment of optimism might be unwarranted. Talk of tapering QE by the Federal Reserve seems to have been put off in the short term and there are serious concerns about whether jobs growth will continue through the summer. And despite the strong earnings reports and the highest level of consumer confidence in six years, the dollar has been falling because of concerns about the Fed, The Wall Street Journal reports.

The Fed may lower its 6.5 percent unemployment threshold or pledge to keep short-term interest rates low even if inflation falls. While not explicitly stated, either policy would show that the Fed is concerned about the pace of the U.S. recovery and that quantitative easing is going to be around a bit longer.

The overly bearish trend has been declining for the last three years, so it isn’t directly tied to what’s happening this month, but if the trend continues and the U.S. recovery falls off track, we could be in for the first negative ‘earnings surprise’ in four years when Q3 reports start rolling in.