4 Sector ETFs to Play on Improving Earnings Trends

Core Insights - The Q2 earnings season shows a positive trend with a higher number of companies exceeding consensus estimates, indicating a stabilizing macroeconomic environment and encouraging management commentary [1] - Earnings estimates for the second half of the year are beginning to rise again due to the positive performance in Q2 [1] Earnings Performance - For the 117 S&P 500 companies that reported Q2 results, total earnings increased by 8.3% year-over-year, with revenues up by 5.3%. Notably, 87.2% of these companies surpassed EPS estimates, and 80.3% exceeded revenue estimates [2] - The EPS beat percentage of 87.2% is above the historical average of 81.9%, while the revenue beat percentage of 80.3% is also higher than the historical average of 70% [3] Sector Analysis - Finance Sector: Earnings for finance companies are up 17.3% year-over-year with revenues increasing by 5.5%. A significant 91.2% of finance companies beat EPS estimates, and 79.4% surpassed revenue estimates [5][6] - Technology Sector: Q2 earnings are expected to grow by 13% with revenues up by 11.8%. The "Magnificent -7" stocks are expected to see an 11.9% increase in earnings on 11.4% higher revenues [7][8] - Consumer Discretionary Sector: Earnings are projected to increase by 107.9% with revenues up by 2.3% in Q2, and Q3 earnings are expected to rise by 6.8% [9] - Aerospace Sector: Q2 earnings are expected to grow by 20.1% with revenues up by 10.4%. Q3 earnings are projected to surge by 257.3% year-over-year [10]