This chart shows the stock market's next problem

Wall Street is growing more cautious on the outlook for corporate profits amid persistent inflation and rising interest rates, and Mr. Market may be starting to take notice.

Fourth quarter earnings estimates for the S&P 500 have tanked 4.9% since Sept. 30, according to new research from Credit Suisse strategist Jonathan Golub.

The downward revisions have been most acute in the tech space as the sector deals with slowing growth, which has led to large layoff announcements recently from the likes of Meta and Salesforce.

"In our view the path of inflation, interest rates, monetary policy, the economy, and earnings will continue to exert the greatest influence on markets over the next year," Truist co-chief investment officer Keith Lerner in a note to clients warned.

That assessment echoes what Sofi's Liz Young told Yahoo Finance Live this week: "Until we see consecutive months of inflation coming down in a meaningful way, I expect them to continue hiking and continue tightening," Young said. "I think that they are quite comfortable with tightening maybe a bit too far, and then trying to sort of ask for forgiveness from markets later with the tools that they have to stimulate."

She later added: "I think the piece of it that hasn’t quite been priced in entirely is that earnings contraction."

The saving grace here for investors: Earnings are still expected to grow in the fourth quarter, with Golub's research presenting a path for S&P 500 earnings to rise 2.3% overall from a year ago.

However, the overall picture isn't pretty — especially when energy is taken out of the equation.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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