Wall Street usually spends earnings season talking down the next quarter. This time it’s doing the opposite.
More S&P 500 gspc (^GSPC) companies are raising their profit outlooks than cutting them, and the gap is the widest in the Bloomberg Intelligence data that starts in 2011.
Analysts are lifting 2026 and 2027 estimates instead of trimming them, a reversal from the usual midyear markdown.
The beats are loud too.
Through July 22, roughly 93% of the companies that had reported topped estimates, per Fundstrat, against a 78% five-year average — what financial writer Mike Zaccardi called “a whopping 15.5% surprise.”
Blended growth — which mixes the results already in with estimates for the companies still to report — is tracking near 25%, a second straight quarter above 20%.
The strength is spreading past Big Tech.
FactSet has the other 493 members of the index on pace for 23% growth, their best since 2021, with four of the five biggest contributors — Micron (MU), Chevron (CVX), Exxon (XOM), and Broadcom (AVGO) — sitting outside the “Magnificent Seven.”
The megacap lead is “expected to flip by the end of the year,” Opening Bell Daily’s Phil Rosen wrote, citing FactSet estimates that put the 493 ahead of Big Tech by the fourth quarter.
Here’s the catch.
This is the setup that usually kicks off a rally, and the rally hasn’t come. The S&P 500 is sitting about where it started the summer, stuck as money rotates out of the AI names that carried it.
The tape isn’t even rewarding the good news. Companies posting a positive earnings surprise have seen their shares slip 0.1% on average around the report, FactSet found, versus a five-year norm of a 1% gain.
Some of that is price. The index already had a strong year priced in with a forward P/E above 20, higher than its five- and 10-year averages. Guidance this good keeps the bull case alive. It just no longer arrives as a surprise.
The outlooks have rarely looked this good. The rally is still waiting on them.
Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on X at @SPYJared or email him at jaredblikre@yahooinc.com.
Click here for in-depth analysis of the latest stock market news and events moving stock prices
Read the latest financial and business news from Yahoo Finance
