S&P 500 Q3 Earnings Forecast Points to Broad Sector Growth

S&P 500 earnings are expected to rise 24.1% in the third quarter from a year earlier, according to Zacks. Revenue is forecast to grow 11.6%, and 14 of the index’s 16 sectors are expected to report higher earnings.

The quarter would mark the eighth straight quarter of double-digit earnings growth for the index. Six sectors are forecast to post double-digit gains. Conglomerates and Consumer Staples are the only sectors expected to see earnings decline, by 35.2% and 0.1%, respectively.

Aerospace leads the growth outlook at 159.7%, followed by Energy at 111.8% and Tech at 42.1%. Basic Materials, Transportation and Industrial Products are also expected to post double-digit growth.

Zacks said Micron, Nvidia and Alphabet are significant contributors to Tech’s expected growth. Without those three companies, the rest of the sector is forecast to grow earnings 20.6%, rather than 42.1%. Excluding the semiconductor industry’s contribution, Tech’s expected growth falls to 29.6%.

Energy has had the largest improvement in its earnings outlook since the start of the quarter, which Zacks linked to elevated oil prices amid the Persian Gulf situation. The report also noted positive estimate revisions in sectors including Aerospace, Industrial Products, Tech, Autos, Transportation, Finance and Utilities.

The semiconductor industry is forecast to post 85.5% earnings growth on 62.8% revenue growth in the quarter. Zacks said the favorable revisions trend is also present in estimates for the final quarter of the year.