The S&P 500’s third-quarter earnings season is set to begin in the coming week, with one forecast calling for earnings per share to rise 25% from a year earlier. Gina Martin Adams, chief market strategist for HB Wealth, provided that estimate as companies prepare to report results for the July-through-September period.
Other recent estimates have placed expected growth closer to 27% to 30%, suggesting that analysts have raised the earnings bar ahead of the reports. A 29% increase would extend the index’s run of double-digit earnings growth to eight consecutive quarters, while the 25% estimate would still mark a third straight quarter above that threshold.
Early reporting has already raised expectations. Lamb Weston said its latest quarterly profit and revenue exceeded its projections and analysts’ expectations, then raised its full-year forecast for an underlying profit measure. Delta Air Lines is scheduled to report third-quarter results on Friday, followed by several major banks the following week.
Stronger corporate profits have helped support equity prices as higher bond yields make competing fixed-income investments more attractive.
The coming reports will test whether companies can meet the elevated forecasts. Technology and artificial-intelligence investment remain major contributors to the earnings outlook, but current estimates also indicate that growth is spreading beyond the largest technology companies. Seven S&P 500 sectors could post earnings growth above 10% in the quarter, while estimates for the remaining 493 companies outside the so-called Magnificent Seven point to 25% growth.