S&P 500 third-quarter EPS estimates maintained their pre-earnings-season upward trend, rising 1.4% from the outlook at the end of June to the end of September.
S&P 500 third-quarter EPS estimates were typically revised downward as the quarter progressed, but this time they rose 1.4% from the end of June to the end of September. The five-year average is approximately -2.2% and the ten-year average is approximately -2.5%, putting the current figure 3.6 and 3.9 percentage points above those respective patterns.
One factor driving up third-quarter estimates was that 72 of the 116 S&P 500 constituent companies issued bullish outlooks. The bullish outlook ratio was 62.1%, while expected revenue growth was also revised upward from 10.9% to 12.3% at the end of September.
More than half of the bullish outlooks came from technology-related companies. In the information technology sector, 44 companies issued bullish outlooks, representing 61.1%. Excluding technology, the bullish outlook ratio fell to 42.4%, while the overall level of bullish sentiment remained high.
At the start of earnings season, technology-led bullish positioning is driving the overall upward revisions, while the focus is on how far the breadth of that trend will expand. The second quarter saw a relatively high earnings beat rate, but attention is on whether the trend will spread to sectors beyond technology in the third quarter.