S&P 500 Earnings Growth Expected Amid Mixed Sector Performance

Recent report indicates a forecast of 7.5% earnings growth for Q4 2024 in the S&P 500, buoyed by strong performances from several sectors, while some face declines, notably in Energy. Mixed retail results reflect stable consumer spending amid challenges for discretionary sectors.

Date: 15-12-2024

AI Rating: 6

The report outlines the current expectations for S&P 500 earnings, highlighting a 7.5% growth for Q4 2024 compared to the previous year. However, it is worth noting that this figure has decreased from earlier expectations of 9.8% growth, indicating a downward revision.

Among the sectors, positive performance is expected from the Medical (+16%), Tech (+14.5%), Finance (+10.7%), and Utilities (+9.1%) sectors, showcasing significant earnings growth potential. Conversely, the Energy sector expects a significant decline in earnings of -20.7%, with notable declines also in Aerospace and Conglomerates at -17.9% and -14.3% respectively.

Additionally, the report highlights the ‘Magnificent 7’ group which is projected to achieve a remarkable earnings growth of +20.5% from the same period last year, significantly boosting overall index performance. Without this group's contribution, the earnings growth for the remainder of the index drops to +3.6%.

In terms of overall earnings growth for Q3, the report indicates that total earnings for the S&P 500 index are expected to be up +8.2% on +5.7% higher revenues. Although the report suggests that the Energy sector has negatively impacted the average earnings growth, it noted that Tech sector contributions elevate expectations, with 22.0% earnings growth indicated.

Looking beyond Q4, anticipated earnings growth is positive for the next two years, especially in the tech sector with expectations of +19.8% earnings growth in 2024 followed by +17.0% in 2025.

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