Second-Quarter Earnings Season Begins with Strong S&P 500 Growth Expectations

Despite ongoing geopolitical uncertainty, trade tensions, and concerns about future interest rate decisions, North American equity markets continue to show remarkable resilience. A major reason for that strength is corporate earnings, with companies once again expected to deliver impressive second-quarter results.

The U.S. economy is dealing with an unprecedented tariff war, the war in Iran continues with no clear end in sight, and investors remain concerned that the U.S. Federal Reserve could still announce another interest-rate hike later this year. Yet the stock markets have largely shrugged off these concerns thanks to strong quarterly financial results.

What’s the Outlook for Second-Quarter S&P 500 Earnings?

The stock market is forward looking and is being juiced by both strong earnings and an equally robust outlook. The S&P 500 had a strong first quarter with a year-over-year growth rate of 27%. On top of that, 84% of companies reported better-than-expected results.

These results have helped the S&P 500 climb significantly higher; more than eight percent year to date and almost 16% on an annual basis. The technology-heavy Nasdaq, meanwhile, is up approximately seven percent year to date and 18% on an annual basis. That’s impressive, but nowhere near as strong as the Toronto Stock Exchange (TSX), which is up 18.5% year to date and 28.5% year over year.

The outlook for the S&P 500 and broader markets, including the TSX, remains excellent.

Much of that optimism is supported by strong corporate earnings expectations as second-quarter reporting season gets underway. The S&P 500 is expected to report annual earnings growth of 23.3%, with the strongest gains projected to come from the energy sector, followed by technology.

Second-Quarter S&P 500 Earnings Off to a Strong Start

Although second-quarter earnings season is still in its early stages, the results have already been encouraging. Even excluding Alphabet’s outsized earnings surprise ($9.11 per share versus $2.31 per share a year earlier), the broader earnings picture remains strong.

For the week ended July 24, 27% of S&P 500 companies have reported second-quarter results. Of those, 86% have reported earnings per share beats; that’s above the five-year average of 78% and 10-year average of 76%.

The blended earnings growth rate—which combines actual reported results with analyst estimates for companies that have yet to report—is currently 37.9%. If that figure were to hold through the end of the reporting season, it would represent the S&P 500’s strongest quarterly earnings growth since the third quarter of 2021 (40.3%). It would also mark the seventh consecutive quarter of double-digit earnings growth.

The outlook for the remainder of the year for the S&P 500 remains bullish, too. Wall Street analysts expect the index to report earnings growth of 26.8% for the third quarter and 24.4% for the fourth quarter. This points to full-year 2026 earnings growth of an impressive 24.1%. That’s double the 2025 earnings growth rate of 12.1%.

Wondering which sectors and stocks are expected to perform the best? Ask the trading experts at Learn-to-Trade.com.

Learn-to-Trade.com, Canada’s Leader in Stock Market Trading Courses

Corporate earnings remain one of the most important drivers of stock prices, making earnings season a valuable learning opportunity for both new and experienced investors. Understanding how earnings reports influence market sentiment, sector performance, and trading decisions can help you make more informed investment choices throughout the year.

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