Third-Quarter Earnings Season Kicks Off with Strong Profit Growth Expected
The third-quarter earnings season is set to begin this week, with analysts forecasting nearly 30% year-over-year earnings growth for the S&P 500. This marks an increase from earlier estimates and reflects strong performance across sectors beyond just the Magnificent Seven (Mag-7). Tech companies are a major driver of these gains, contributing over 40% to the index with estimated EPS growth rising to 65%. Strong results from AI chipmakers like Micron Technology have eased concerns about market saturation. Despite optimism around earnings, challenges remain. Rising bond yields and high oil prices could hinder further equity gains. Additionally, while most S&P sectors are expected to grow, some—like materials, consumer staples, and health care—are seeing downward revisions in EPS estimates. Market breadth is also a concern as only 20% of stocks trade above their 50-day moving average. Analysts from Barclays and UBS remain bullish on the market's potential for growth through year-end and into early next year.
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Topics: AI investment bond yields earnings S&P 500