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Earnings Season Wrapping Up on a High Note

August 12, 2025

Time to Read: 2 minutes

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.

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Job Market Hanging in There

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.

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Markets Since Iran Conflict

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.

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Signals from Spreads

Credit spreads have risen yet remain historically low, reinforcing our view that the oil shock is likely temporary — not a driver of long-term growth concerns.

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Dollar Strength: What Does It Mean for Markets?

Geopolitical tensions have lifted oil prices, sent stocks lower and driven flows into the safety of the U.S. dollar, which has strengthened versus peers. While a weaker dollar previously supported international equity outperformance, dollar stabilization now suggests that tailwind is fading, underscoring the importance of diversification across regions and asset classes.

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