Earnings season wrapping up on a high note
Second quarter earnings season is winding down, but earnings are up, and better than expected. Despite some potentially concerning signals from the real economy, including muted job gains, and possible seasonal volatility, we remain constructive on equities. A positive second quarter earnings season strengthens our conviction.
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Published on 11 August 2025
Second quarter earnings season is winding down, and results have delighted many investors. More than 90% of S&P 500 companies have already reported and 82% beat estimates, the highest rate in four years. Once all data comes in, earnings are expected to have grown 11.7% compared to 4.9% projected at the end of June.
Additionally, estimates for the full year have also improved; consensus estimates call for 10.2% annual earnings growth, up from 8.7% in June. Despite signs of potential weakness in the real economy and job market, earnings have been better than anticipated.
Historically, August and September have been seasonally challenging months, suggesting we could see an increase in volatility in the near term, but the ongoing strength of earnings instills us with confidence in equity performance over the long term. We also remain positive on the artificial intelligence (AI) growth story, which bolstered the results of Magnificent Seven companies this past quarter. The innovation’s benefits are not only affecting technology companies; AI is driving margin expansion and productivity enhancements across many other sectors too, further supporting our constructive stance on the future outlook of the U.S. equity market.
787959 Exp : 11 August 2026
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Rising margin expectations continue to support equities, underscoring the resilience of corporate profitability in the face of last year’s tariffs and this year’s Middle East war. The U.S. remains especially strong compared to peers, though first quarter earnings will be an important test.
Technology valuations have meaningfully declined over the past year, but the sector continues to stand out for its strong earnings growth and relative resilience. While near-term uncertainty remains, tech still appears well positioned as a key driver of broader market growth.
Recent jobless claims data point to a resilient U.S. labor market, with both initial and continuing claims remaining low and signaling that unemployment is still contained. Although job growth has softened and remains subdued, March’s job growth of 178,000, the highest since 2024, is encouraging. Our constructive outlook still holds despite continued uncertainty related to the war in the Middle East.
Markets are reacting to the Middle East conflict with sharp moves across asset classes, signaling broad risk repricing and shifting safe‑haven behavior. While volatility is elevated, fundamentals like earnings growth continue to support our constructive outlook.
