Wall Street was expecting corporate profits in the third quarter to be horrendous. So the stock market could have staged a nice rally had earnings been even slightly less than horrible.

But as it turns out, corporate profits are disappointing even by Wall Street's low standards. As of the middle of last week, 1,185 companies had reported their earnings and the results were 2 percent worse than Wall Street had expected.

According to the Institutional Brokers Estimate System (IBES) at Lynch, Jones & Ryan, an investment firm, 551 companies announced earnings that were lower than Wall Street's expectations, 490 had results that were better than expected and the rest were right on target.

Bigger corporations did better. Of the companies that make up the Standard & Poor's 500 stock index, 134 reported negative surprises and 130 had positive surprises. The rest either reported earnings that matched Wall Street's expectations, or hadn't released results yet.

Stock prices, of course, recently staged a nice rally following an early October sell-off. But the boost came almost entirely in reaction to the declining price of oil. Experts had been anticipating a partial and temporary recovery in stock prices if tensions cooled in the Middle East. And that's what they got.

But some experts had also been hoping for a rally inspired by corporate profits. After all, they argued, Wall Street had become so pessimistic about profits in such a short period of time that pleasant surprises were bound to happen.

By last week, traders seemed to have given up hope that corporate earnings reports would give the market a boost. Instead, they were content that -- except in a few industries like high-technology and financial services -- Wall Street seemed to be shrugging off profit reports altogether.

The shock of earnings results may dwindle as the year goes on. But that's not because companies will be doing any better. It's simply that analysts keep lowering their expectations.

According to Rick Pucci at IBES, analysts are cutting 1991 earnings estimates on four companies for every one estimate they are raising. And that ratio is the worst since the 1981 recession.

The last time the United States was on the verge of a recession, General Motors Corp. reduced its common stock dividend. That dividend cut -- in the second quarter of 1980 -- is causing some anxious moments among GM shareholders today.

But don't worry, say some Wall Street analysts, GM's dividend is safe for now.

Philip K. Fricke of Prudential-Bache Securities Inc., said GM isn't about to trim its payout this time around because the automotive company is far different going into this recession. He said there are "very important differences in the conditions that surround the industry and GM now and the conditions in 1980."

Along with the lower capital spending, Fricke said that the GM of today "has a more broad-based source of net income, for example its overseas operations and its technology subsidiaries."

Arvid Jouppi of Keane Securities said that GM's cash position is relatively stable and its slumping stock needs the current dividend for support. "They will keep the dividend. And if they don't, I would be critical of it," Jouppi added.

GM is playing Santa Claus these days -- its $3 a share annual dividend amounts to a yield of about 8 percent. The current dividend level was established in 1989, after four long years of holding the payout steady.

There is a sense of uncertainty surrounding all dividends nowadays. Because they are under the gun, companies are cutting dividends with a frequency not seen since the last recession. John Crudele is a syndicated financial columnist for the New York Post.