The S&P 500 enters the second-quarter 2026 earnings season with expectations at unusually demanding levels. Consensus forecasts point to annual earnings growth of 24.4% for the quarter, followed by growth rates above 25% during the remainder of the year. If achieved, this would mark four consecutive quarters in which earnings have increased by more than 20%, a sequence not seen since the economic reopening that followed the COVID-19 disruption.
Corporate guidance has reinforced the positive outlook. Among companies that have updated their forecasts, 57% have raised their guidance, representing the highest proportion since 2021. However, this level of confidence also creates a timing risk. Strong growth is already embedded in market expectations, meaning companies may need to deliver results and outlooks significantly above forecasts to produce a favourable share-price response.
The S&P 500 trades at a forward price-to-earnings ratio of 20.4 times, around 20% above its five-year and ten-year averages. At the same time, the yield on ten-year US government debt stands at 4.55%, leaving the equity risk premium near the lower end of its recent range.
Growth is expected across most of the index, with ten of the S&P 500’s eleven sectors forecast to report year-on-year earnings increases. Healthcare is the sole exception, with an anticipated decline of 9.5%, largely due to an exceptional impact associated with Gilead Sciences.
Energy is expected to record the strongest sector growth at 122.1%, supported by the sharp rise in oil prices. Technology follows with projected earnings growth of 63.3%, while Materials is forecast to increase by 35.2%, helped by mining and chemicals businesses. Growth across the remaining sectors is expected to be considerably more moderate, highlighting the index’s continued dependence on a relatively narrow group of companies.
CMC Markets plc (LON:CMCX) is a UK-based financial services company that offers online trading in shares, spread betting, contracts for difference and foreign exchange across world markets.
