Merrill Lynch & Co. thinks the profits at America's largest corporations were down around 4 percent in the third quarter from second-quarter levels. Argus Research Corp., another highly regarded Wall Street firm, believes the decline could be as much as 5 percent.

Almost everyone agrees that companies didn't do well in the last few months. And because of that consensus, the stock market will likely become incredibly nervous as the time nears for corporations to actually report their profits.

But the stock market does have one ace in the hole.

Wall Street has become so negative in its outlook for corporate profits over the past few weeks that stock prices might not actually react with the horror that might be expected. Wall Street analysts, for instance, have been cutting more than twice as many corporate earnings estimates as they have raised. Specifically, in the week ended Aug. 31, only 1.7 percent of all the estimates on Standard & Poor's 500 companies were raised, while 3.5 percent were lowered. The ratio of raised estimates to lowered estimates was 0.486-to-1, according to Richard Pucci, a vice president at Lynch Jones & Ryan in New York.

That figure compares with a ratio of 0.632-to-1 in early August, when 3.6 percent of the estimates were raised and 5.2 percent were lowered.

If the economy is really in a recession, the analysts could become more negative. During the 1981 recession, Pucci said there were typically four earnings estimates that were reduced for every one raised. The ratio, therefore, was 0.25-to-1.

Usually, Wall Street lowers its estimates slowly, but it has jerked them down quickly in recent weeks.

So there is the possibility that analysts have exaggerated how badly the economy is doing. And if that's the case, the stocks of companies that pleasantly surprise Wall Street with their earnings could improve.

Of course, there is also the possibility that Wall Street hasn't reduced its earnings expectations enough. After all, if the economy is in a recession, earnings might be coming down faster than expected.

Hugh Johnson, market strategist for First Albany Corp., said he believes that some stocks may now be attractively priced. But he said he doesn't feel he can act on those feelings. "It's extraordinarily difficult to recommend any stock in this climate because the risk has been raised several decibels," he said.

"The Middle East situation makes it impossible to forecast with any certainty the outcome for the economy, inflation and interest rates," he said.

Health-conscious Americans have been reducing restaurant visits for years. And now industry experts are afraid these already wounded eateries will be devastated by a recession.

"Now you have a double whammy," said Joseph Doyle, a Smith Barney & Co. analyst who recently completed a major review of the lodging and restaurant industry.

On the fast-food side, it seems that Americans are quicker to give up visits to Mexican restaurants and pizza parlors than they are to forgo hamburgers and chicken.

According to industry statistics, sales at franchised Mexican restaurants declined 3.9 percent in 1989 and are projected to be down another 3 percent this year. Pizza restaurant sales were off 2.9 percent in 1989 and will be down an estimated 1.2 percent this year. Hamburger joints, meanwhile, saw sales drop 1.6 percent last year and could see a decline of 1.8 percent this year.

Franchisees of chicken, meanwhile, had a 4.2 percent gain in sales last year. Expectations are for a slight improvement this year.

In regular-type restaurants, sales (after adjusting for inflation) were down about 1 percent in the second quarter of this year. And Smith Barney's Doyle said that trend seems to be continuing.

But what worries experts most is that sales started down even before the economy began to threaten people's wallets. Real disposable income rose sharply, for instance, from the second quarter of 1988 through the third quarter of 1989. But people weren't disposing of much of that discretionary income in restaurants.

So what happens now that consumers seem to be holding their wallets a little tighter?

John Crudele is a columnist for the New York Post.