To The Moon

Earnings season has begun. As of July 11, 21 S&P 500 companies have reported Q2 results, with total earnings up +1.3% year-over-year and revenue up +5.8%. So far, 76.2% have beaten EPS expectations, and 81% have exceeded revenue estimates — a strong performance, though based on a small sample. This week, 38 more companies are set to report, including major banks, Netflix, 3M, and Schlumberger.

1. Overall Earnings Expectations Are Weakening

For Q2 2025, S&P 500 earnings are expected to grow +4.7% year-over-year, with revenue up +4.0%. This would mark the slowest pace of earnings growth since Q3 2023 and a clear deceleration compared to recent quarters.

2. Downward Revisions Intensify

Since the U.S. announced new tariff policies in early April, corporate earnings expectations have undergone a new wave of sharp downward revisions.
Sectors with the most significant downgrades include: autos, energy, transportation, basic materials, and construction. Only the aerospace and utilities sectors have seen slight upward revisions.

3. Sector Divergence

Tech and financials — the two heavyweight sectors — together account for over 50% of S&P 500 earnings, and both saw earnings forecasts revised down at the start of Q2.

The energy sector is a major drag: 2025 earnings for the energy industry are expected to fall -13.3%, making it a key factor in the overall downward revision of earnings. Excluding energy, full-year S&P 500 earnings growth would reach +8.3%.

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4. Market Sentiment Turns More Optimistic

Despite ongoing macro uncertainties, the market generally expects actual earnings to beat expectations. While companies may avoid issuing formal guidance, management teams are expected to maintain a positive tone in their qualitative commentary on business trends.

Are the cuts offering chances for earnings beat?

Can big banks beat and benefit from volatile markets as usual?

With major banks setting new all time highs, which big banks are you bullish the most?