Big banks open earnings season as S&P 500 stays near records

what happened

Stocktwits reports that third-quarter earnings season begins this week with results from major banks. After a strong second quarter, strategists expect the positive momentum to continue, though at a slower pace. Matt Stucky of Northwestern Mutual called the likely outcome a “net positive,” with earnings growth potentially in the upper 20s or slightly higher, compared with roughly 30% year over year in Q2.

Scott Chronert of Citi Research said markets need both the artificial-intelligence trade and the broader macroeconomic backdrop to remain supportive. He expects the revenue growth recorded by large technology companies in Q2 to carry into the new reporting period. At the same time, he said a broader market advance beyond the largest AI names is needed to support his 8,100 target for the S&P 500.

Stucky said market performance may depend more on valuation multiples than on earnings themselves. He pointed to Federal Reserve hawkishness and the 10-year rate, with inflation and oil also influencing those factors. Aya Yoshioka of Wealth Enhancement Group said the cost of capital matters not only for AI-related shares but also for other macro-sensitive companies across the index.

According to CNBC, the S&P 500 is up nearly 14% year to date and about 120% since Oct. 12, 2022, marking its fourth bull-market anniversary. Technology stocks account for about 40% of the index. In September, the average S&P 500 stock lost nearly 6%, while more than three in four shares declined; the index fell only 0.4%. At the time of writing, SPY was down 0.06%, QQQ 0.42%, DIA was up 0.14% and TLT gained 0.28%, with Stocktwits sentiment bullish for all four ETFs.

why it matters

The key market question is whether bank results, AI-linked revenue and hyperscaler investment returns can offset concerns over Fed policy, inflation and concentrated leadership in technology shares.

instruments