Barclays says S&P 500 earnings beat expectations in 2Q26

Investing.com -- Second quarter earnings for 2026 have exceeded expectations across the S&P 500, with 85% of companies beating consensus estimates, according to Barclays. This compares to the long-term trend of 76%.

With approximately 63% of S&P 500 constituents by count and 67% by market cap having reported results, companies delivered an average earnings surprise of 30.7%, well above the long-term trend of 5.2%. Communication Services, led by Alphabet Inc (NASDAQ: GOOGL), and Consumer Discretionary, led by Amazon.com Inc (NASDAQ: AMZN), showed standout contributions, while Utilities lagged.

Revenue growth reached 11.2% year-over-year and earnings per share grew 25.1% year-over-year, both exceeding last quarter's figures and long-term averages. Beat-to-miss ratios were particularly favorable across technology, media, telecommunications, healthcare, financials, and industrials sectors.

Big Tech companies including Apple Inc (NASDAQ: AAPL), Amazon, Alphabet, Meta Platforms Inc (NASDAQ: META), Microsoft Corp (NASDAQ: MSFT), and NVIDIA Corp (NASDAQ: NVDA) continued to lead performance. Excluding NVIDIA, which has not yet reported, Big Tech earnings surprises tracked at 87%, compared to a long-term median of 7.2%. Amazon and Alphabet benefited from gains related to marked-to-market equity investments.

Big Tech earnings per share growth tracked at 32.4% year-over-year, the highest since third quarter 2025. The group's next twelve months price-to-earnings ratio has remained around 24 times since the beginning of the month and currently trades at approximately 24.4 times.

Street consensus for full-year 2026 earnings per share has risen to $351 since the start of earnings season, driven primarily by technology, media, telecommunications, and energy sectors.

Stock price reactions to earnings reports have shifted from previous quarters. Both earnings beats and misses have generated negative price reactions on average, marking the first time since fourth quarter 2024 that this pattern has occurred.

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