Earnings beats are now the norm. What the stock market needs to keep rallying — SkimNews
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- Q3 earnings season opens Tuesday with JPMorgan, Goldman Sachs, Citigroup, and Wells Fargo reporting; FactSet consensus calls for ~30% YoY profit growth, up from 27% three months ago.
- Tech sector profits are expected to grow 65% this quarter, up from an estimated 57% three months ago, with upward revisions for Nvidia, Micron, and Dell doing the heavy lifting per FactSet.
- Goldman Sachs shifted to an "overweight" stance on equities Monday, citing a "Goldilocks" backdrop with low recession risk and inflation easing in 2027.
- UBS forecasts the S&P 500 will reach 8,400 by June next year, per CIO Ulrike Hoffmann-Burchardi.
- Bank of America warns the S&P 500 "reads expensive" on 17 of 20 valuation measures, implying a -3% annualized return over the next decade — though BofA forecasts 32% growth and a roughly 3% beat to consensus this quarter.
- S&P 500 breadth is narrow: nearly 38% of its stocks are off 20% or more from their 52-week high, even as the index hits records.
- Financials have fallen 5% since August 31 and hover near their 200-day moving average, with analysts saying rising rates are starting to sting loan growth.
Why it matters: Tech accounts for 40% of the S&P 500 and the index sits at record highs — yet 38% of S&P 500 stocks are already off 20%+ from their 52-week highs. BofA warns 30%+ growth is now the baseline, meaning investors banking on earnings beats to push stocks higher face a higher bar given stretched valuations across 17 of 20 measures.
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