As each day passes, estimates for how bad Q2 earnings will be grows. According to The Wall Street Journal, "analysts estimate S&P 500 operating earnings -- income excluding one-time items -- fell 11.5% in the second quarter."

While the paper points out that earnings often come in a bit worse than expected, this quarter could be a bit different. Everyone expected the numbers to be bad in sectors including banking, brokerage, insurance, autos, and airlines. But the real question is whether business and consumer spending have been hit harder than predicted.

If spending is down, even companies which are expected to do fairly well such as Apple (NASDAQ: AAPL) and Cisco (NASDAQ: CSCO) could face rough earnings reports as big business and the little consumers defer purchases which they feel they cannot afford. That means that tech earnings, which were expected to be OK, could take a big hit.

If tech falters, what is left? Energy and commodities companies? Perhaps, but that is thin ground on which to build an earnings season.

Douglas A. McIntyre is an editor at 247wallst.com.

Clorox Co. (NYSE: CLX) reported a Q1 profit drop this morning on the back of raw material cost increases. It also announced that it will pay just under a billion ($925 million) for Burt's Bees, a leading provider of natural health care products. Burt's Bees has moved from health food stores and organic markets to the mainstream mass market in the last few years, probably marketing itself to be sold. Apparently, it worked.

Clorox's net income dropped to $111 million ($0.76 per share) from $112 million from the year-ago period, which could be seen as a slight decline based on commodity price swings in 2007 alone. Sales for the Q1 period did rise to $1.24 billion, a 6.7% increase.

Clorox indeed said in its earnings release that corn and soybean prices were main factors in the profit decline. Those two food commodities are used in its Hidden Valley food products (namely salad dressings). Resin prices rose in the quarter as well to their highest levels ever, affecting plastic products such as Glad trash bag products and bottles used to hold its namesake bleach.

All in all, Clorox's quarter was not bad considering the commodity turmoil it has exposure to, but I have to question the valuation of Burt's Bees. How did the company come up with a valuation of nearly a billion dollars? Clorox, are you listening?

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Nokia Corp. (NYSE: NOK), the world's largest manufacturer of wireless handsets, saw a very admirable rise in Q3 profit levels -- to the tune of 85% growth -- on the backs of increasing awareness and sales in emerging markets. Nokia, which has about 39% share of the global cellphone market at this time, also explained that it expected this level to remain throughout the Q4 period.

Years ago, the word was that Nokia had lost some edge and that Motorola (NYSE: MOT) and South Korean stalwart Samsung Electronics would eat handily into Nokia's market share. That has not happened, as Samsung has still been growing, and Motorola's product lineup has completely stagnated until just recently. Nokia went on the offensive at the end of 2005 with higher-end smartphones, decent mid-level phones and an attack into the entry-level, emerging market and has not looked back since.

Nokia's Q3 net income beat analyst estimates as well, coming in at €1.56 billion ($2.21 billion), or 40 eurocents per share. Nokia executives explained the growth as coming from new, lucrative multimedia handsets in addition to growing sales in emerging markets. One gray cloud over the company for Q3 was from its mobile networks joint venture with Germany's Siemens AG. As what seems always to happen, handset sales are the growth engine, while infrastructure and related equipment take a back seat. In Q3, that seat was at the very rear of the bus for Nokia.

Pfizer (NYSE: PFE) saw a sharp drop in its third-quarter profit, as the world's largest drugmaker's net income declined 77% for its most recently completed quarter. Two big takeaways here: Pfizer exited the Exubera inhaled-insulin product market (taking a $2.8 billion charge in the process) and the company faced more severe generic product competition as well.

Generic drugs always hamper big pharma firms, and it's not going to get any easier in the next few years. Pfizer even lowered its 2007 net income forecast when it released Q3 results, partly on expanded generic competition. Try this on for size: Pfizer's Q3 profit came in at $761 million, down from $3.36 billion in the year-ago quarter. Sales fell 2% in the quarter to come in at $12 billion.

In what could be considered a lack of due diligence (oddly) or some terrible mis-forecasting, Pfizer's purchase of the worldwide rights to the Exubera product from Europe's Sanofi-Aventis in 2006 was a complete disaster. The $1.4 billion purchase produced Q2 revenue for Pfizer of $4 million. Let's see: even nominal growth rates would have given Pfizer perhaps $20 million in global annual revenue. Yikes -- that's more than a 20-year period for return there. Pfizer called Exubera numbers "disappointing," but I would call them "totally disastrous." Adding to the pain are the exclusivity losses for blockbuster products like Zithromax, Zoloft and Norvasc, but at least Pfizer sees the writing on the wall, what with 10,000 layoffs and everything.

In the Concrete Canyon that is the financial capital of the world, there are data points, and then there are data points.

Thursday's docket offers a "data point of significance" when Freddie Mac (NYSE: FRE) reports Q2 results. As one of two public, government-sponsored agencies formed to promote home ownership by increasing the availability of mortgage funds, any Freddie Mac report would be noticed by economists, analysts and traders alike, but this quarter's report takes on added import in light of recent subprime mortgage and mortgage-backed asset defaults that have roiled the stock and credit markets in the world's major developed economies and produced a credit crunch.

Moreover, the defaults were a major factor in the Dow Jones Industrial Average's more than 10% retreat from its +14,000-level high earlier this summer and the concomitant housing sector's slowdown that may cause the U.S. economy to slip from projected, below-trend GDP growth into a recession.

Among other FRE metrics, on Thursday Wall Street analysts will pay very close attention to portfolio and credit guarantee income, and the overall quality of its retained portfolio. FRE is expected to post a decline in Q2 2007 earnings per share, to 81 cents from $1.13 in Q2 2006, according to the Reuters consensus estimate. Freddie Mac's shares were down 57 cents to $60.63 in Wednesday afternoon trading.

Still, just as significant, and perhaps more so, will be Freddie Mac's statement and conference call comments: Wall Street will scrutinize any comments FRE may have on the scope of subprime charge-offs and defaults, overall mortgage credit quality (including delinquency rates), housing market conditions, and any comments FRE may have on its retained portfolio.

The aforementioned operational statistics would be noteworthy in a typical market. But in a market that's now diligently (if belatedly) collecting and analyzing subprime and credit information in order to get a comprehensive picture of the scope of subprime defaults and overall mortgage market conditions, Freddie Mac's Q2 report Thursday is, without question, a data point of the most pertinent sort.

After Best Buy Co. Inc.'s (NYSE: BBY) disappointing quarterly results yesterday, competitor consumer electronics retailer Circuit City Stores (NYSE: CC) was expected to do even worse this morning when reporting results from its most recent quarter. Well, Circuit City did not disappoint and reported a $55 million loss this morning after sales at its U.S. stores fell for the first time in three years.

Circuit City's loss of $0.33 per share was a steep change from the year-ago profit of $0.04 per share as sales slipped about 4.3% to $2.49 billion for the quarter that ended on May 31. With Circuit City disappointing these past several quarters and with the current slashing of headcount and store count, can this ailing electronics behemoth get back on track? All those cost savings from these personnel and store changes should help, but Circuit City has more work to do beyond that throughout 2007.

Wal-Mart's commitment to enter the consumer electronics arena in a heavier fashion is not good news to Circuit City, which has its hands full just trying to compete with larger rival Best Buy these days. With CC shares sitting at $16.07 at the close of the market yesterday, that figure represents a decline of about 15% in 2007. And it seems poised to head even lower today as shares are down 2.6% in pre-market trading (9:16 a.m.).

Circuit City shareholders are probably a tad angry, although seasonal shifts and larger-than-expected pricing fluctuations (for the worst) in the red-hot flat-panel television market have jilted Circuit City around a bit this year (and during the last part of 2006). It may come as some relief that Best Buy cut its profit outlook for the year yesterday as well, so Circuit City can at least have a fleeting smile before the turnaround work carries on.

$10.81 billion in revenue. Net income of $3.48 billion, 35 cents a share. Microsoft's quarterly earnings results (it's the company's first fiscal quarter) came in with a bang, a good 11% increase over the year-earlier quarter.

For Microsoft Corporation (NASDAQ:MSFT), this news is sweet indeed. The company has shown strong growth in its Entertainment and Devices division, largely on the back of the Xbox 360 -- 6 million consoles sold!, trumpets the earnings release -- but, as Melly Alazraki mentioned in her preview earlier today, the company's real hopes are set on the upcoming release of Vista. Will it crash our computers? Will it suck? Will it justify the costly investments in R&D?

I'm sure many of these questions will be answered in the analyst conference call, which I'll be liveblogging -- 5:30 Eastern, 2:30 in local Pacific time. The stock was up just a touch to $28.35, and was down again a bit in after-hours to $28.20.