Wall Street earnings season kicks-off with focus on Magnificent Seven results
Analysts expect another solid reporting period for Wall Street as investors look to further outperformance from the Magnificent Seven stocks.
Wall Street earnings season unofficially begins with some of the markets biggest banks handing down Q3 results.
Analysts expect solid S&P 500 growth in Q3
Wall Street’s third-quarter earnings season unofficially begins this week, with major US banks opening proceedings and setting the tone for the broader market. Analysts are anticipating a robust set of results across the S&P 500 for the quarter, underpinned by resilient demand and strong corporate margins. According to FactSet, earnings per share for the index are forecast to rise around 8% year-on-year, supported by revenue growth of roughly 6%.
(Source: Fact Set)
Magnificent seven in focus as AI narrative faces new test
As in recent quarters, attention will centre on the Magnificent Seven — the group of mega-cap tech names that have driven much of the S&P 500’s earnings and price gains this year. Their results will be key to determining whether lofty valuations can be sustained. In the previous quarter, the cohort was expected to post earnings growth of around 14%, but delivered an exceptional 27%, extending a consistent run of upside surprises. Markets will be watching closely to see if this momentum continues, particularly as investors look for evidence that AI-related investments are translating into real revenue growth rather than just higher capital expenditure.
Markets enter earnings season near record highs
Equity markets approach the reporting period with the S&P 500 trading around record highs, reflecting optimism that earnings strength will persist – and US rates will be cut going forward. However, valuations are stretched, and expectations leave little room for disappointment. The tolerance for earnings misses may be low as a result, especially among the most richly priced tech stocks. The next few weeks will therefore serve as a key test of whether corporate results can justify the market’s AI premium and sustain the rally into the final quarter of the year.
(Source: Trading View)
(Past performance is not a reliable indicator of future results)