S&P 500 Third-Quarter Earnings Growth Seen at 29.6%

what happened

According to Barron's, analysts expect earnings for S&P 500 companies to increase 29.6% year over year in the third quarter. That would be the index's third consecutive quarter of growth above 25%, compared with an average quarterly gain of 12.6% over the past decade, FactSet data show. The earnings season unofficially begins this week with reports from major banks.

Company guidance has reached a record level. Seventy-two S&P 500 companies have issued positive earnings forecasts, the highest figure since FactSet began tracking the measure in 2006. Only 44 companies have given negative guidance, versus a 10-year average of 57. Information technology accounts for 44 of the 72 positive preannouncements, led by software and semiconductor companies. Semiconductor earnings alone are projected to rise 130%.

The energy sector's projected year-over-year earnings growth has climbed to 121% from 79% in June after crude oil prices increased. Technology earnings estimates have risen to 65%, eight percentage points above their initial level. S&P 500 net profit margins are expected to reach 15% in the third quarter of 2026, up two percentage points from a year earlier and the second-highest level since 2009.

The current earnings boost could nevertheless be nearing its peak. Wall Street expects growth to slow over the following three quarters, with the quarterly rate cut in half by the second quarter of 2027. Even then, it would remain well above the 10-year average. Deutsche Bank Research said resilient demand was helping companies pass higher costs to customers, while consumer conditions remained weak.

why it matters

The stronger earnings outlook supports sentiment toward U.S. equities ahead of reporting season, particularly in technology, semiconductors and energy. Forecast slowing in later quarters points to a less durable earnings impulse.

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