Wall Street analysts expect Q2 earnings to be solid, according to a July 13 local time report by Yahoo Finance citing JP Morgan strategist Mislav Matejka. Matejka noted that negative earnings pre-announcements are significantly lower than typical levels, while corporate earnings estimates have shown a consistent upward trend. The strategist attributed the rising estimates to fundamental improvements in Q2 economic activity, partly due to manufacturing recovery in Europe remaining resilient despite geopolitical headwinds.
JP Morgan Attributes Earnings Estimate Rise to Economic Fundamentals
Matejka emphasized that the increase in earnings estimates likely reflects actual improvements in corporate fundamentals rather than complacent analyst optimism. "The rise in earnings estimates reflects the fundamental improvement in Q2 economic activity, partly because manufacturing recovery in Europe has been resilient despite geopolitical headwinds," Matejka stated.
![Negative/Positive Earnings Pre-Announcement Ratio Trend]()
Source: JP Morgan
S&P 500 Q2 Earnings Growth Estimate Reaches 23.3%
The S&P 500's Q2 year-over-year earnings growth estimate stands at 23.3%, according to FactSet data. This figure exceeds the 10-year average of 10.3% and the 5-year average of 16.4%. If the 23.3% estimate holds, it would mark the second consecutive quarter of 20%+ earnings growth and the seventh consecutive quarter of double-digit growth.
Ten of the 11 sectors are expected to show earnings growth, with energy, technology, and materials sectors anticipated to be particularly strong.
![Quarterly EPS Trend Since 2024]()
Source: JP Morgan
Hyperscaler Capital Expenditure and Consumer Resilience Support Earnings
Yahoo Finance explained that massive capital expenditures by hyperscalers such as Amazon have directed hundreds of billions of dollars into hardware, memory chip manufacturing, power generation facilities, and data center construction. Despite geopolitical concerns and persistent inflation worries, the overall US economy has remained stable thanks to consumer spending resilience, as demonstrated by Delta Air Lines' strong quarterly results announced last week.
Truist market strategist Keith Lerner described the current environment: "We are in an earnings boom period where earnings improvements are appearing across large-cap, mid-cap, and small-cap stocks, as well as in emerging markets."
FAQ
What is Wall Street's Q2 earnings outlook for the S&P 500?
Wall Street analysts expect solid Q2 earnings, with the S&P 500's year-over-year earnings growth estimate at 23.3% according to FactSet data. This exceeds both the 10-year average of 10.3% and the 5-year average of 16.4%. JP Morgan strategist Mislav Matejka cited significantly lower negative pre-announcements and rising earnings estimates as key indicators.
Which sectors are expected to lead Q2 earnings growth?
Ten of the 11 S&P 500 sectors are expected to show earnings growth in Q2, with energy, technology, and materials sectors anticipated to be particularly strong. Yahoo Finance attributed this partly to massive capital expenditures by hyperscalers like Amazon, which have directed hundreds of billions of dollars into hardware, memory chip manufacturing, and data center construction.
