Earnings Season Puts Global Stock Rally to the Test
Analysts see strong profit growth, but investors want evidence beyond AI as inflation concerns, rising yields and softer consumer demand weigh.
Key takeaways
- S&P 500 companies are forecast to post 25% year-over-year third-quarter profit growth.
- Analysts expect US AI-related stocks’ third-quarter earnings to rise 47%.
- Investors are watching consumer demand, bank credit quality and rising yields.
Global stocks’ prospects for a year-end rally increasingly depend on corporate earnings. S&P 500 companies are expected to report a 25% year-over-year profit increase for the third quarter, according to Bloomberg Intelligence data. JPMorgan Chase and Goldman Sachs begin major US banks’ reporting season Tuesday as stocks trade near records.
Investors want strong results amid concerns about inflation, bond volatility and artificial-intelligence spending. The MSCI All-Country World Index has stalled since reaching a record in mid-August, despite analysts raising earnings estimates.
Analysts expect US AI-related stocks’ earnings to rise 47% in the third quarter. Bloomberg data show expected regional earnings growth of 66% in Asia, led by Taiwanese and South Korean companies. Recent results have drawn muted responses: Micron’s earnings beat received a tepid reaction, while Samsung shares fell 2.4% despite a nearly ninefold rise in quarterly operating profit.
Investors also want evidence that growth extends to consumer, industrial and banking companies. A Morgan Stanley analysis puts median Russell 3000 earnings on course to rise 14% in 2026, while concerns about weaker consumer spending and higher borrowing costs cloud the outlook.
Banks face questions about loan growth and credit quality as yields climb. In Europe, the Stoxx 600 banks sector fell about 8% over the last two weeks, as French fiscal worries threatened one of the region’s best-performing sectors.
This article was produced with the help of AI technology. Source: Yahoo Finance
