Q2 reporting kicks off this week, and expectations are high. Analysts expect S&P 500 earnings to grow about 23.6% from a year ago, and because companies usually beat, FactSet notes the final number will likely land higher, closer to 29%, which would be the strongest growth since 2021. Only about 4% of companies have reported so far, so this is the calm before the wave, and the banks kick things off this week.
What’s the Schedule Like?
- This week (July 14–18): The big banks set the tone. JPMorgan, Bank of America, Citigroup, Goldman Sachs, Wells Fargo, and Morgan Stanley all report. More than half of this week’s names are financials. Netflix, Johnson & Johnson, UnitedHealth, and chip giants ASML and TSMC round out the week.
- Late July into early August: The cast widens quickly, and the mega-cap technology names start reporting. This stretch usually determines how a season is remembered and can have a real impact on the index.
- Through August: The long tail fills in the picture, with Nvidia typically among the last of the big names to report.
We’ll refresh the dashboard every Tuesday as the numbers roll in.
The Banks
The big lenders are expected to have had a strong quarter. Per Bloomberg estimates, the five largest US investment banks are forecast to grow fees roughly 27% from a year ago, with equity-underwriting fees alone on pace for their best quarter since 2021, helped by a wave of large IPOs and a pickup in dealmaking. The catch, as the Financial Times flagged this week, is how much of that good news is already reflected in the share prices.
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How Did We Do in Q1?
Q1 set a high bar: the S&P 500 saw earnings growth of about 28.6%, with nearly every company reporting. But the more interesting story wasn’t how much earnings grew, it was how.
Eight of the eleven sectors grew earnings faster than sales, and several did by a wide margin. Info Tech grew EPS 54.8% on 31.9% revenue growth. Communication Services nearly hit 49% earnings growth on 15% sales growth. Materials grew profits more than four times as fast as its top line.
When profits outrun sales like that, it’s less about selling more and more about what happens in between: wider margins, fewer shares outstanding, and some easy year-ago comparisons. Corporate America wrung a lot of profit out of every dollar of sales.
What We’re Eyeing
That Q1 pattern of profits growing much faster than sales is what makes Q2 worth watching closely. Analysts haven’t just kept their forecasts high; they’ve been raising them at an unusually fast clip heading into the season, which is rare. A few market strategists have started asking whether expectations have run ahead of reality. Expectations this high leave a thinner margin for error, even when nothing is really wrong.
We aren’t predicting disappointment. The earnings last quarter were very strong and broad-based. This is simply the lens we’ll be watching through as the results come in.
Next Week
We’ll be back next Tuesday with the first real read on Q2: how the banks did, where blended growth is tracking, and whether all that analyst optimism is holding up. See you then.
By Harry McDonald, Analyst, Investment Research
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