By Meg Richards
The Associated Press

NEW YORK - It seems investors made a bad bet when they bid stocks sharply higher this month in anticipation of strong third-quarter earnings.

Companies didn't have the solid numbers to justify Wall Street's big advance, so the market retreated this past week. Investors had set their hopes too high for the quarter, analysts said, but they're unlikely to be as impulsive in the near future.

"I think there was some kind of frenzy that had built up ahead of the earnings season," said Bernie Schaeffer, chairman of Schaeffer's Investment Research in Cincinnati. "Like there was going to be some kind of magic in what was going to be reported this month."

The earnings have been good, but not magical. With reports in from nearly two-thirds of the Standard & Poor's 500 companies, 87 percent either met or surpassed Wall Street's forecasts, according to Thomson First Call.

Overall, the companies reporting so far have beaten the consensus estimates of Wall Street analysts by 6.4 percent, Thomson First Call said. During the average quarter, companies outperform analyst estimates by about 3 percent overall.

But only the most stellar results could justify the prices set by eager investors this month, Schaeffer and other analysts said.

"You wonder, 'Gee, if these good earnings can't make the market go up, what do we do for an encore?' " said Richard A. Dickson, senior market strategist at Lowry's Research Reports in Palm Beach, Fla. "We probably won't duplicate this in the fourth quarter, and next year is a wild card."

The rush to buy this month could be a sign that growth will be peaking soon, said Sam Burns, an analyst with Ned Davis Research in Venice, Fla.