As the third quarter earnings season approaches, analysts have noted a significant shift in expectations. The Citigroup Economic Surprise Index turned positive by the end of Q3, suggesting a potential upside in earnings, contrary to the previous expectation of a 3.5% year-over-year decline. Analysts have revised earnings expectations downward, creating a lower threshold for companies to exceed. Since the second quarter, expectations have dropped by 33%, following a realized 11% year-over-year earnings growth. Despite a negative momentum in earnings revisions, which reached its lowest level since December 2022, this could set the stage for a favorable earnings season, as companies may find it easier to surpass the lowered expectations.